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 determined. However, due to a mix of national and global events. It is difficult to ascertain the actual determinants. This study investigates government expenditure determinants. A time series from 1st July 1997 to 1st December 2025 from the Ministry of Finance, Planning, and Economic Development (MFPED) data portal was utilized. Descriptive statistics, unit root tests, cointegration, optimal lag tests, and the Pesaran and Shin test for establishing the level relationships for the ARDL model were conducted. Over the period, total public expenditure was averaged at UGX 1213 billion while mean tax revenues amounted to UGX 809.97 billion. Debt/grants stood at an average of UGX 79.4 billion. Economic activity averaged 114.8%, and the value of exports was approximately US$ 243.3 million. Tax revenues boost government expenditure while debt puts it down. Reinforcing Wagner’s Law, the correlation revealed that higher economic activity and export volumes hyped the government expenditure. Tax revenue, debt, exports, and economic activity positively determine government expenditure in the long run. The positive effect of tax revenue reflects the tax-to-spend hypothesis. The first differences of tax revenue, debt, and exports harm government expenditure in the short run, except for economic activity.