11/11/2011 04:46 EST | Updated 01/23/2014 06:58 EST

New Greek cabinet to be sworn in, a day after appointment of former ECB vice Papademos as PM

ATHENS, Greece - Greece's incoming prime minister is due to name his cabinet Friday, a day after being appointed to head an interim coalition government that will push through a new European debt deal and secure continued bailout funding to prevent a catastrophic default.

Former European Central Bank vice-president Lucas Papademos held talks with the country's main political parties late into Thursday night to determine who would staff his cabinet, ahead of the formal swearing in Friday afternoon.

The appointments are a delicate balancing act for Papademos as he seeks broad support for his administration. The swearing-in ceremony was delayed by two hours to 4 p.m. (1400GMT), the president's office said, without giving a reason.

Papademos' appointment capped two weeks of a political crisis that threatened to derail an EU plan to get a grip on the Greek debt crisis and raised questions about the country's continued presence in the eurozone.

"The participation of our country in the eurozone is a guarantee for the country's monetary stability. It is a driver of financial prosperity," the incoming premier said Thursday after being given the mandate to form a government.

Papademos must now implement the terms of Greece's latest debt deal — a €130 billion ($177 billion) agreement reached on Oct. 27. It includes provisions for private bondholders to forgive 50 per cent — or some €100 billion — of their Greek debt holdings.

He must also secure the next €8 billion installment of the country's initial €110 billion eurozone and International Monetary Fund bailout, without which Greece will default in a matter of weeks.

European officials have said they will withhold the funds until Greece passes the new debt deal, and they have also asked for written guarantees from the heads of the country's two main parties, its central bank governor, and the new premier and finance minister.

Papademos, who also served a stint as Greece's central bank governor and is not a member of any political party, was named to take over from outgoing prime Minister George Papandreou, who agreed to step aside half way through his four-year term.

"This is clearly a positive, very positive development. Finally, the Greek political parties are getting together and are reaching a consensus, and they have put a non-politician at the helm," said Gikas Hardouvelis, chief economist at Eurobank in Athens.

Although the composition of the new cabinet had not been announced by midmorning, many key ministerial positions were expected to remain unchanged. Finance Minister Evangelos Venizelos, who was deeply involved in negotiating the latest European debt deal, is widely expected to retain his post.

The main conservative opposition party was expected to see four of its party members in the new cabinet, party officials said on condition of anonymity because the final government composition was not settled.

The latest political turmoil was sparked by Papandreou's Oct. 31 surprise announcement that he would put the new debt agreement to a referendum. His plan infuriated European leaders, rocked global markets and led many of his own Socialist party lawmakers to rebel and call for his resignation.

Papandreou withdrew the public vote plan after the main conservative opposition said they backed the deal, and agreed to step aside.

After days of intense power-sharing talks, Papandreou's Socialists and the conservatives, led by Antonis Samaras, along with a smaller right-wing party, appointed Papademos as interim premier. Once Greece's continued bailout funding is secured and the country has implemented the new bailout agreement, he is to lead the country to early elections, tentatively scheduled for to February.

Angered by nearly two years of austerity, including cuts to salaries and pensions and repeated tax hikes that have led to a deep recession, Greeks have organized frequent strikes and demonstrations that often turn violent. Papademos' appointment may dampen the protests, at least at first, some analysts argue.

"I think he will get that kind of brief honeymoon," said Thanos Dokos, head of the Hellenic Foundation for European and Foreign Policy. "People were desperate enough and now (may) give a new face, a new person, who's not a professional politician some leeway to try to do his job in the proper way. And of course, at some point they will be expecting some results, which I'm afraid will not be forthcoming in the short term."


AP Television's Apostolis Fotiadis in Athens contributed to this report.