(Bloomberg) -- Uganda expects the World Bank to rescind a decision to halt new loans to the East African country because of its passage of anti-LGBTQ legislation before it concludes budgeting for the next fiscal year.

Negotiations with the Washington-based lender are “progressing very well” and hopes are for it to reverse the decision by the time the government concludes budgeting for the next financial year in February, Deputy Secretary to the Treasury, Patrick Ocailap, said Tuesday in an interview in the capital, Kampala.

The Finance Ministry said in preliminary estimates earlier this month that international budget support could plunge 99% in the year starting July 1, 2024, without providing further details.  

The World Bank, which has long been Uganda’s biggest provider of budget support, froze funding in August because the nation’s anti-LGBTQ act contradicts its values. The law passed in May includes the death penalty for so-called “aggravated homosexuality,” defined in part as engaging in sex with a minor or if the offender is HIV-positive.

Talks between Uganda and the World Bank commenced a week after the lender’s Aug. 8 decision, Ocailap said. “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,” he said.

The World Bank’s Ugandan office didn’t immediately respond to calls seeking comment.

Kampala-based Civil Society Budget Advocacy Group said last month that the lender’s decision could have ripple effects across Uganda’s economy and may cause further shilling weakness if other development partners such as the Organisation for Economic Co-operation and Development and the International Monetary Fund follow suit. The lender’s decision has contributed to an almost 4% slump in the shilling against the dollar.

The World Bank’s International Development Association is Uganda’s biggest creditor, accounting, together with the IMF and the African Development Fund, for more than half, or $7.04 billion, of the country’s external debt by end-June, according to the Finance Ministry.

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