The World Bank on Thursday postponed a $90 million loan to Uganda's health system over a law that toughened punishment for gays, an unusual move for an institution that typically 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 in an email.
Ugandan President Yoweri Museveni signed an anti-gay bill earlier this week that strengthens already strict laws against homosexuals by imposing a life sentence for certain violations and making it a crime to not report anyone who breaks the law.
The World Bank, a poverty-fighting institution based in Washington, usually refrains from getting involved in countries' internal politics or in issues such as gay rights to avoid antagonizing any of its 188 member countries.
World Bank President Jim Yong Kim, however, sent an email to bank staff saying the bank opposes discrimination, and would protect the safety of all employees.
He said passage of the Ugandan law was not an isolated incident, as 83 countries outlaw homosexuality and more than 100 discriminate against women.
"In the coming months, we will have a broad discussion about discrimination with staff, management, and our Board on these issues," Kim said in the email obtained by Reuters. "Now is the right moment for this conversation."
Homosexuality is a taboo in almost all African countries and illegal in 37, including in Uganda where it has been a crime since British colonial rule.
The bank still has a $1.56 billion portfolio of projects in Uganda, which it ranks as one of the world's poorest countries.
The loan postponement follows 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.
The United States is the World Bank's biggest member.
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.