Ugandan officials say they are confident the World Bank will reverse a decision to halt new loans that was imposed after the East African nation enacted controversial anti-gay legislation, which the lender said contradicts its core values.

Ministry of Finance Deputy Secretary Patrick Ocailap is quoted by Bloomberg as saying that negotiations with the World Bank are “progressing very well” and Kampala expects the decision will be rescinded by the time the government concludes budgeting for the next financial year in February.

The World Bank halted new financing to Uganda in August over the controversial Anti-Homosexuality Act signed into law in May, which prescribes the death penalty for certain same-sex acts described as "aggrevated homosexuality".

Uganda’s Finance Ministry said in preliminary estimates earlier in September that international budget support could plunge 99% in the fiscal year starting on July 1, 2024.

“By the time we conclude the budget for the next financial year it will be over, and we shall be back on track for normal operations,” Ocailap said, adding that talks commenced a week after the Washington-based lender’s August 8 decision.

The World Bank is Uganda’s biggest lender, accounting for roughly 55% of its multilateral external debt stock.

Cumulatively, its loan pipeline to Uganda over the 2024-2025 financial year stands at $1.7bn, a major chunk of the $5.4bn in loans and grants the bank had earmarked for disbursement to the country.

The decision by the World Bank to stop new loans is already having negative impacts on the local currency, which slumped by almost 4% against the dollar.