* Madagascar held calm presidential vote late 2013
* IMF says recognises Madagascar government
* Aid cuts hurt public spending, hammered growth
* World Bank says meeting president next week (Adds IMF saying it now recognises government)
By Lovasoa Rabary
ANTANANARIVO, March 13 (Reuters) - The International Monetary Fund has restored ties with Madagascar for the first time since a coup on the Indian Ocean island in 2009, 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.
Finance Minister Lantoniaina Rasoloelison told Reuters on Thursday the resumption of normal relations was critical to getting aid flowing once again to its cash-starved Treasury. The IMF later confirmed it now recognised Madagascar's government.
"Recognition of the government will allow the fund to resume its work with Madagascar," spokesman Gerry Rice told reporters in Washington.
Rice made no comment on any possible IMF visits or programmes to the world's fourth largest island that is famed for its exotic wildlife and targetted by foreign miners for its nickel, cobalt, coal, iron ore and Uranium deposits.
Rasoloelison 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 anaemic 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 Andry Rajoelina seized power.
AILING ECONOMY
"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.
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.
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.
Forming 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. (Additional reporting by Anna Yukhananov in Washington; Writing by Richard Lough; Editing by Drazen Jorgic and Toby Chopra)
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