Debt, revenue, and growth: empirical analysis of the determinants of Uganda’s government expenditure trajectory

Abstract

Various theories provide useful accounts of how government expenditure is deter-mined. However, due to a mix of national and global events. It is difficult to ascertainthe actual determinants. This study investigates government expenditure determi-nants. A time series from 1st July 1997 to 1st December 2025 from the Ministry ofFinance, Planning, and Economic Development (MFPED) data portal was utilized.Descriptive statistics, unit root tests, cointegration, optimal lag tests, and the Pesaranand Shin test for establishing the level relationships for the ARDL model were con-ducted. Over the period, total public expenditure was averaged at UGX 1213 billionwhile mean tax revenues amounted to UGX 809.97 billion. Debt/grants stood at anaverage of UGX 79.4 billion. Economic activity averaged 114.8%, and the value ofexports was approximately US$ 243.3 million. Tax revenues boost governmentexpenditure while debt puts it down. Reinforcing Wagner’s Law, the correlationrevealed that higher economic activity and export volumes hyped the governmentexpenditure. Tax revenue, debt, exports, and economic activity positively determinegovernment expenditure in the long run. The positive effect of tax revenue reflectsthe tax-to-spend hypothesis. The first differences of tax revenue, debt, and exportsharm government expenditure in the short run, except for economic activity.