The World Bank has postponed a US$90 million (NZ$108m) loan to Uganda's health system over a law that toughened punishment for gays, an unusual move for an institution that usually avoids wading into politics.
''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,'' World Bank spokesman David Theis said.
Ugandan President Yoweri Museveni signed an anti-gay bill earlier this week that strengthened already strict legislation against homosexuals, and made it a crime to fail to report anyone who broke the law.
Homosexuality was a taboo in almost all African countries and illegal in 37, including in Uganda where it had been criminalised since British colonial rule.
The World Bank, a poverty-fighting institution based in Washington, typically refrained from getting involved in countries' internal politics or in contentious issues such as gay rights in order to avoid antagonising any of its 188 member countries.
The bank still had a US$1.56 billion (NZ$1.87b) portfolio of projects in Uganda, which it ranked as one of the world's poorest countries.
The loan postponement followed the announcement by Norway and Denmark that they would hold back donations to Uganda because of the law. Other donors have also threatened to follow suit, and the United States said it was reviewing ties.
Western anger over the anti-homosexuality law has triggered a sharp fall in Uganda's shilling currency, leading the central bank to intervene for two days in a row.
The World Bank's executive board had been set to approve the Ugandan health project on Thursday. The money was meant to supplement a 2010 health loan that focused on maternal health, newborn care and family planning.