The Southern African Development Community said in a communique after a summit in Swaziland that leaders of the group would not recognise Andry Rajoelina, who took power in a move that was condemned as a coup by the international community.
Former Madagascar President Marc Ravalomanana, who quit under pressure from the military, briefed SADC leaders on the political crisis in his country.
The SADC stance further isolated Rajoelina, a 34-year-old former disc jockey. The group did not call for elections. But SADC said it would give Rajoelina time to respond to its position and if he does not it will consider further action.
"The extraordinary summit suspended Madagascar from all community’s institutions and organs until the return of the country to constitutional normalcy with immediate effect," said a communique.
SADC was quick to take a strong stand on Madagascar, unlike its approach to a political crisis that paralysed Zimbabwe before a power-sharing agreement reached in September.
"The extraordinary summit condemned in the strongest terms the unconstitutional actions that have led to the illegal ousting of the democratically elected government of Madagascar, and call for an immediate restoration of constitutional order in the country," the communique said.
The African Union suspended the Indian Ocean island on March 20 and told the new administration to hold an election within six months as provided for by the constitution.
Rajoelina, who has set a 24-month transition, remains defiant. Before the SADC statement was issued he said auditors hired by his government were reviewing all contracts with foreign investors because the country was receiving too little revenue.
Some 34 people were injured on Saturday in demonstrations in Madagascar’s capital, Antananarivo. It was the sixth day in a row that thousands of Ravalomanana supporters had protested.
SADC heads of state at the summit in Swaziland were also reviewing an economic recovery plan Zimbabwe presented, and agreed to push for an end to Western sanctions.
Zimbabwe’s Industry and Trade Minister Welshman Ncube said his country told the summit it needed $8.5 billion over the next two to three years, including $1 billion for budget support and a $1 billion credit line.
"We don’t expect that SADC will be able to do that, but that is what is required to resuscitate the economy," South African Deputy Finance Minister Nhlanhla Nene told Reuters.
Zimbabwe’s new unity government between President Robert Mugabe and Prime Minister Morgan Tsvangirai needs Western donors, who say their money can only flow once a democratic government committed to economic reforms is in place.
Zimbabwean Finance Minister Tendai Biti told reporters at the summit he was confident that Western countries would help but it could be difficult to move quickly.
"This government is only five weeks old so you can’t expect us to sprint like Usain Bolt when we are still in diapers and we are still learning to crawl," he said, referring to the Olympic champion who holds the world 100 metres world record.
"But crawl we will, stand we will, walk we will and sprint we will."