The EU will extend next week the suspension of 600 million euros ($738 million) of development aid to Madagascar for 12 more months for failing to return to democracy after a March 2009 coup, a draft statement showed.

The European Union, the island's largest donor, suspended the aid last year in response to the army-backed overthrow of Marc Ravalomanana's government.

The statement due to be approved by EU ministers on Monday calls a unilateral transition plan drawn up by the de facto authorities led by President Andry Rajoelina "unacceptable".

The draft, obtained by Reuters, said budgetary and development aid would be suspended for 12 more months.

"The measures do not affect humanitarian and emergency aid and certain projects that directly affect the population," the draft statement said.

"Operations already under way will continue except for activities and payments directly involving the government and its agencies," it added.

The statement said dialogue with Madagascar would continue and be stepped up "if a consensus-based solution for a return to constitutional order is reached".

Last month Rajoelina named 10 new ministers, including five military officials, in a cabinet reshuffle which the opposition said fell way short of creating a neutral government.

Foreign donors and international mediators have for months urged Madagascar's political rivals to form a consensus government tasked with holding new elections.

After negotiations collapsed in April in South Africa, Rajoelina vowed to forge ahead with a new interim government that would oversee a referendum on constitutional reform and a presidential vote in November.

Reuters