Economists say the World Bank’s move to halt loans to Uganda over the country’s anti-gay law could reverse its economic gains. The country has just recorded the lowest inflation in the last fifteen months which was considered an indication it was recovering from the COVID-19 shocks.
Uganda is facing new economic sanctions over the anti-gay law. The World Bank has halted new loans to the country because of the controversial legislation. The international lender says the law contradicts its values.
John Walugembe, a Ugandan economist, says the decision is likely to hurt Uganda’s economy.
“It’s going to be felt because if the government can’t raise money to provide services, health, education, roads, these are the places where Ugandans are going to hurt the most. Even if it is not felt at that level, it will be felt in the businesses because they will be asked to pay more, yet they are not earning more, so you are likely to see increases in business failure.”
Uganda’s government says the decision is unjust but says it will continue to engage the World Bank and other partners to review the sanctions.
In May last year, the Uganda government enacted the anti-homosexuality law which imposes a death penalty for so-called aggravated homosexuality. The US government has also asked Uganda to repeal the controversial anti-gay law or face sanctions.
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