US cuts aid to Uganda over anti-gay laws

Uganda’s shilling dropped to the lowest level in nine months after the US government said it was cutting aid to the East African nation.

The US cut aid over a February law that toughened punishment for homosexual acts.

The currency fell 0.8 percent to 2,610 per dollar by 1:37 p.m. in the capital, Kampala, the lowest since Aug. 26.

The shilling slumped 6.1 percent since President Yoweri Museveni signed the bill on Feb. 24.

The US is discontinuing or redirecting funds for programs in Uganda, where life sentences can be imposed for some homosexual acts, the National Security Council said last week.

Norway, Denmark and Sweden also redirected or withheld aid.

The shilling weakened “because of the negative sentiment after the US announced they are cutting off donor funding,” Joseph Mwanguo, head of treasury at NIC Bank Uganda Ltd. said by phone today. “There will definitely be reduced inflow of dollars.”

It will impact people that the US “purports to support and aims to protect,” the Ugandan government said in an e-mailed statement.

Source: Bloomberg