Uganda has signed an agreement with Saudi Arabia's Islamic Development Bank (IDB) for a $295 million loan to fund road construction and other projects, the east African country's finance minister said on Tuesday.

The move underscores Uganda's efforts to diversify its sources of external funding, as talks with the World Bank to resume lending have dragged on without fruition.

Ugandan Finance Minister Matia Kasaija signed the loan agreement with IDB president Muhammad Al Jassar in Saudi Arabia's capital Riyadh, Kaisaja said in a post on social media platform X.

The money will finance construction of a bridge crossing the River Nile in northwest Uganda and roads totalling 105 kilometres, according to the ministry.

The World Bank, traditionally Uganda's biggest external lender, suspended new loans to the country after the enactment of a harsh anti-homosexuality law. (Reporting by Elias Biryabarema; editing by George Obulutsa and Varun H K)