The World Bank has postponed a £54m loan to Uganda over its tough new anti-gay law.
It’s the largest financial penalty to be handed to the country since the law, signed by President Yoweri Musveni, went into force on Monday.
The loan was intended to boost Uganda’s health services.
A spokesman for the World Bank said: “We have postponed the project for further review to ensure that the development objectives would not be adversely affected by the enactment of this new law.”
In an editorial for the Washington Post, World Bank President Jim Yong Kim warned that legislation restricting LGBT rights “can hurt a country’s competitiveness by discouraging multinational companies from investing or locating their activities in those nations”.
He said the World Bank would discuss how such discrimination “would affect our projects and our gay and lesbian staff members”, adding: “Institutionalised discrimination is bad for people and for societies. Widespread discrimination is also bad for economies.
“There is clear evidence that when societies enact laws that prevent productive people from fully participating in the workforce, economies suffer.”
The Dutch Government said in a statement on Thursday that it is suspending aid to Uganda’s Government but will continue supporting non-governmental groups, joining the governments of Norway and Denmark in taking similar action.
Sweden has also said it will review its aid spending.
The UK Government confirmed to PinkNews on Tuesday that it only gives aid to NGOs in Uganda and not the country’s government.