Cyprus President Demetris Christofias has appointed a new cabinet, installing economist Kikis Kazamias as finance minister.

The previous cabinet had resigned on 28 July amid an energy crisis triggered by a blast that destroyed the island’s main power station.

Centre-right party Diko then pulled out of the coalition with the communists over differences on economic policy.

Cyprus risks becoming the fourth eurozone economy to seek a bailout.

Ratings agencies Fitch’s, Standard & Poor’s and Moody’s have all downgraded the island’s credit rating this year, with its banking sector holding between 4.5bn and 5bn euros ($6.4-7bn; £4-4.4bn) of Greek debt.

The Cypriot economy’s growth prospects have suffered as a result of rolling power cuts since the Vassilikos plant blew up on 11 July, when a cargo of confiscated Iranian munitions exploded at a nearby military base.

Austerity measuresMoody’s lowered its growth forecast for the island to zero for this year and 1% next year, while opposition parties accused the government of backtracking on planned financial reforms and austerity measures.

However, Mr Kazamias told Reuters: “What I hope is for sensibility and consensus to prevail. The problems affect the whole country – no-one is exempted.”

The communist AKEL party is now in a clear minority in parliament, with only 19 deputies in the 56-member House of Representatives, making it difficult to pass legislation.

Other appointments to cabinet were Erato Kozakou as foreign minister and Demetris Eliades as defence minister.

Neoclis Sylikiotis retains his post as interior minister, Sotiroulla Charalambous stays as labour minister and Loukas Louka remains in charge of justice.

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