The International Monetary Fund's board on Wednesday postponed a decision to expel Zimbabwe as a member, but called the government's policies to halt the country's economic decline "insufficient." The IMF board began a process to expel Zimbabwe last year after the government fell back on debt repayments to the global lender, as its economy struggled with its worst economic crisis since independence in 1980.

"The board's decision provides the country with an opportunity to significantly strengthen its co-operation with the IMF, with the aim of addressing its economic decline and resolving its overdue financial obligations," it said in a statement.

Critics blame Zimbabwe's economic crisis on President Robert Mugabe's controversial land reform policy under which white-owned farms were seized for distribution to landless blacks in 2000.

The seizures, often violent, were condemned by Western governments, including former colonial power Britain. Donors and investors withdrew from the once prosperous country amid concerns over human rights abuses, a lack of rule of law and uncertainty about property rights.

Gross domestic product tumbled 40 percent between 2000 and 2003 as agricultural, mining and manufacturing output fell, inflation soared to around 600 percent, and the country faced chronic food, fuel and medicine shortages.

But recently inflation has fallen to 133 percent as the central bank has managed to suppress a thriving illegal market in foreign currency and tightened bank supervision.

The IMF's board acknowledged the policy steps, but said they were not enough to turn the situation around. It said it would review the situation again in six months, or sooner.

Copyright Reuters, 2005