KAMPALA, July 28 (Reuters) - Sweden has resumed financial aid to Uganda after suspending some assistance in March over a law widely condemned by donor nations that increases punishment for homosexuals.
Uganda relies on aid to fund about 20 percent of its annual state budget, but it has resisted Western pressure to rescind the law, enacted in February, which imposes jail terms of up to life for "aggravated homosexuality", including gay sex with a minor or while HIV-positive.
The Swedish embassy in Kampala said it would provide 1.35 billion crowns ($198 million) over the next five years to improve child and maternal health, sustainable growth and employment in the east African country.
"Sweden wants to help create better conditions in Uganda for sustainable economic growth and development. This is why Swedish aid to Uganda will remain substantial," Swedish Minister for International Development Cooperation Hillevi Engstrom said.
"Sweden continues to support human rights and freedom from violence", the embassy said in its English-language statement.
In a Swedish-language statement issued by the foreign ministry in Stockholm last Thursday, Engstrom also said: "I will specifically monitor the situation of women's rights and LGBT rights. It is important that LGBT people and others do not become scapegoats because of changes in Swedish aid."
LGBT stands for lesbian, gay, bisexual and transgender.
The Ugandan law also criminalises lesbianism for the first time and makes it a crime to help individuals engage in homosexual acts.
In March, Sweden said it would immediately cut aid totalling about $1 million to Uganda because of the law. Other donors including Norway, Denmark, the United States and the World Bank also cut aid.
Ugandan President Yoweri Museveni has rejected criticism that the law fans homophobia and has accused the West of "social imperialism" in its approach towards African countries.
However, in a possible softening of its stance, Kampala recently said donors had misinterpreted the law, which it said had been intended to prevent promotion of gay sex to children, not to punish or ostracise homosexuals.
The Ugandan shilling has been under some pressure since Museveni signed the law, amid concerns over the impact of the dispute with aid donors on the state budget.
Homosexuality is taboo in many African countries and illegal in 37 nations on the continent. Most Ugandans back the latest anti-gay bill, which also has the support of influential Ugandan church leaders.
($1 = 6.8137 Swedish Crowns) (Reporting by Elias Biryabarema; Additional reporting by Sven Nordenstam in Stockholm; Editing by James Macharia and Gareth Jones)