The World Bank says it is halting new loans to Uganda because a new anti-gay law contradicts its core values.
Homosexual acts were already illegal in Uganda, but anyone now convicted faces life imprisonment under the new law which was enacted in May.
The World Bank said it was committed to helping all Ugandans without exception to "escape poverty, access vital services, and improve their lives".
Uganda dismissed the move by the World Bank as unjust and hypocritical.
Its ambassador to the United Nations called the move super "draconian".
In a tweet, Ambassador Adonia Ayebare said it was time to rethink the World Bank's work methods and the board's decisions.
The Anti-Homosexuality law imposes the death penalty for so-called aggravated cases, which include having gay sex with someone below the age of 18 or where someone is infected with a life-long illness including HIV.
After deploying a team in May to Uganda, the World Bank released a statement on Tuesday saying the law "fundamentally contradicts the World Bank Group's values".
It noted its vision "includes everyone irrespective of race, gender, or sexuality".
As a result, the World Bank said "no new public financing to Uganda will be presented to our Board of Executive Directors" pending a review of the efficacy of new measures put up in the context of the new legislation.
In response to the World Bank's decision, Uganda's state minister for foreign affairs Okello Oryem queried the consistency of the move compared to other countries.
"There are many Middle East countries who do not tolerate homosexuals, they actually hang and execute homosexuals," she said, according to Reuters news agency.
"In the US many states have passed laws that are either against or restrict activities of homosexuality... so why pick on Uganda?"
The legislation has been condemned by Ugandan campaign groups, which have instituted court action to annul the legislation on the grounds that it is discriminatory and it violates the rights of LGBTQ+ people.
But it remains unclear when hearings will begin.
The World Bank joins the US in imposing sanctions against Uganda over the Anti-Homosexuality law.
Source: BBC
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This is a wake up to the youth of Africa who are ready to take up leadership positions in the near future. I urge the good people of Uganda to hold on to their beliefs. Uganda is older than the world bank .The current crop of African leaders have disappointed their people but all is not lost . Africa is said to be the richest continent on earth. If future leaders can sit up, stop corruption, stop wasting their countries resources on needless expenditures, stop inflating contracts, stop taking kickbacks from foreigners and allowing them to come in and loot our natural resources etc Africa will not need the world bank to survive. From pre- colonial Africa up to date which African country has been totally transformed by way of world bank assistance? That should tell us that the world bank is not a panacea to the development challenges facing Africa. Take a look at an African country such as Ghana which is blessed with all the natural resources you vacant think of on Mother Earth ; Gold, Bauxite, manganese, timber, cocoa, crude oil, the sea- two giant harbours @ Tema and Takoradi, a vibrant youthful population ready to work, mention any food crop, Ghana grows it. Due to lack of visionary leadership this blessed country had to beg Germany and China to intervene for the IMF to loan us 3 billion dollars , not a go ooooo, but in tranches spread over a 3 year period, we are told this is the 17th time Ghana is seeking IMF assistance after inflicting itself with difficulties, avoidable difficulties. No European country will go to IMF for 600,000 dollars if they have the resources at Ghana's disposal. Ghana's / Africa's challenges are not as a result of lack of resources but lack of visionary leadership. In Africa those ideas have no power, those with power have no ideas at all. Visionary political leadership is Africa's bane. The people of Uganda should stand firm. Africans were practicing African traditional religion, it was the Europeans who introduced Christianity to Africa and we accepted it with the bible as the word of God. They very bible the brought to Africa abhors homosexuality, nothing has changed. It is the same bible, Africans have no bible of their own. The poorest family in the world still eats food however late, the mouth of the human being is too short to chop grass. The world bank can go with their filthy money. If it's because of Gods command, the people of Uganda abhors homosexuality , God will show them the way. They should show us one staff of the world bank who came into this world through homosexuals. Non sense. Kosia tow.
This world bank is confused. What has lifting people out of poverty got to do with LGBTQ unless they are also telling us they have lost their focus. I think as Africans we need to strengthen the African development bank to be able to support the African economies and stop relying on these bias so called international banks. Can they do same to China and Saudi Arabia? Are their anti LGBTQ laws not even harsher than what the African countries enacting.