HARARE (AFP) -- The IMF on Tuesday urged Zimbabwe to make sharp cuts in public spending to prevent a worsening of its economic crisis, but economists said there was no chance of any real change in government policy.

"Going forward, the key will be first to ensure that sharp cuts are made in real terms in fiscal spending, including quasi-fiscal activity previously undertaken by the Reserve Bank of Zimbabwe," the International Monetary Fund said in a statement after a delegation wrapped up a two-week visit to Harare.

The IMF, which will have to decide whether to expel Harare, called for a battery of policies to halt the country's economic crisis, warning Zimbabwe's economy could further deteriorate if veteran President Robert Mugabe's government did not change tack.

"Zimbabwe's economic crisis calls for the urgent implementation of a comprehensive package comprising mutually reinforcing actions," it said.

"Without a fundamental change in policies, prospects are for a continued deterioration in the economic situation. "A crucial element of this package will be strong fiscal adjustment."

The IMF team arrived in Harare on December 3 to assess Zimbabwe's economic health ahead of the global lender's meeting early next year in which it is expected to decide on whether to keep Zimbabwe in its fold.

Zimbabwe, which narrowly averted expulsion from the IMF last September for debt arrears of 295 million dollars (222 million euros) through a surprise payment of 120 million dollars, still owes the IMF 125 million dollars.

Czechoslovakia is the only country to have ever been expelled from the IMF.

The former British colony is in the throes of economic crisis characterized by world-record inflation, 70-percent-plus unemployment and chronic shortages of basic goods like fuel and the staple corn meal.

The mission noted the deteriorating economic conditions since the last visit in January and February this year.

"Inflation has accelerated while shortages of food, fuel, basic consumer goods and agricultural inputs remain acute," the IMF said.

"Progress on structural reforms has been limited and uncertainty over property rights continues to depress investor confidence." it added.

The IMF said the government should aim to stay within the current 2007 budget, adding that fiscal expenditure needs to be prioritized to ensure adequate food imports, an urgent improvement in health infrastructure, and well-targeted social safety nets to protect the poor.

Many observers have warned that the government is unlikely to alter its course until Mugabe stands down. Although the 82-year-old had been expected to step down in 2008, the ruling party effectively gave him a two-year extension to his presidency at the weekend.

Victor Kurebwa, an economist with the Techfin Financial Research group, doubted that the government would heed the IMF's advice.

"The unfortunate thing is that current recommendations by the IMF will not be readily accepted by the government," Kurebwa said. "Our economic policies are currently disjointed, we are no longer following proper economic policies. For example, how can a small economy like Zimbabwe have a domestic debt of 119 billion dollars?"

Best Doroh, an economist with ZB financial holdings, agreed that the government was unlikely to adopt the IMF policy prescriptions.

"Looking ahead, I don't think they will be any major policy shift by the government despite these suggestions," Doroh said.

Central bank governor Gideon Gono told AFP earlier this month that he was confident Zimbabwe would avert expulsion from the IMF after talks with the delegation over the country's long-outstanding arrears.

Since August, the central bank has pegged its exchange rate at 250 Zimbabwe dollars against the greenback, yet on the parallel market the same unit fetches 2,700 dollars.