By Lovasoa Rabary
ANTANANARIVO (Reuters) - The International Monetary Fund has restored ties with Madagascar for the first time since a coup on the Indian Ocean island in 2009, the government said on Thursday, a vital step to rebuilding confidence in the battered economy.
The election of President Hery Rajaonarimampianina in December marked an important step towards ending a five-year political crisis that saw donors suspend funds, depriving the government of cash and stunting economic growth.
Outgoing Finance Minister Lantoniaina Rasoloelison did not say when the IMF had informed the government that it was resuming normal relations, but said the move was critical to getting aid flowing once again to its cash-starved Treasury.
The IMF has not made a public statement announcing a change in its relations with the Antananarivo government.
"Cooperation is re-established," Rasoloelison told Reuters.
Rasoloelison was finance minister in coup leader Andry Rajoelina's government in the run-up to the presidential and legislative elections in December and will remain in the post until a prime minister is named and the new cabinet formed. He could be re-appointed.
He told Reuters in October the cash-starved authorities would need direct aid restored by the end of March to enable Madagascar to meet its basic spending needs and boost anemic growth levels.
External financing made up 40 percent of the Indian Ocean's island's budget until donors withdrew aid after rebel troops in March 2009 stormed the presidential palace and former disc jockey Rajoelina seized power.
"We have been waiting for this decision. The IMF is the key to opening the door to discussions with other donors," Rasoloelison said, adding he expected to lead a government delegation to the IMF spring meeting in April.
WORLD BANK MEETING
The World Bank told Reuters in January the timing of when it would resume normal relations, which would allow it to provide budget support again, hinged on the formation of a new government on the huge nickel-producing island.
The World Bank continued lending to Madagascar during the near five-year long political crisis. But it halted budgetary support and focused instead on emergency aid.
A World Bank spokesman in Madagascar said the bank will meet the president, himself a former finance minister, next week.
"If there is such a meeting, it's because there is progress," spokesman Erick Rabemananoro told Reuters.
The formation of a new government has taken longer than expected, delayed by political wrangling over who will be prime minister.
Rajoelina ruled himself out last month - a move that will have pleased Western donors - and no political party has a large enough parliamentary majority to nominate the premier without the help of independent lawmakers to make up the numbers.
The World Bank forecasts the economy will expand 3.7 percent this year before accelerating to 4 percent in 2015, below earlier projections and insufficient it said to significantly alleviate poverty levels that deepened during the crisis.
That figure falls to around 2 percent if the mining sector, driven by Rio Tinto's mineral sands project and Toronto-listed Sherritt International's nickel and cobalt mine, is excluded.
(Writing by Richard Lough; Editing by Drazen Jorgic and Toby Chopra)