The World Bank has halted a 90 million-dollar (£54m) loan to Uganda over its anti-gay law that has drawn widespread criticism from Western governments, the United Nations and human rights groups.
A bank spokesman said the loan was intended to help the east African nation strengthen its health systems.
He said the bank division that lends to the private sector wanted to ensure that the development objectives of the project would not be adversely affected by the new law.
President Yoweri Museveni signed a bill on Monday, saying he wanted to deter Western groups from promoting homosexuality in Africa. It calls for life in prison for those convicted of engaging in gay sex.