By Patrick Lannin and Kristin Arna Bragadottir
REYKJAVIK, Jan 31 (Reuters) - A new centre-left government for crisis-hit Iceland expects to take office on Sunday after securing key political support and aims to lead the country to an election in April, parties said on Saturday.
Reminding politicians of the discontent that helped topple the previous centre-right prime minister, Geir Haarde, the first leader to fall as a direct result of the global crisis, some 2,000 people again demonstrated outside parliament.
The crisis, sparked after Iceland's fast expanding banks collapsed under a weight of debt, forced Iceland to take a $10 billion International Monetary Fund-led rescue package and caused widespread anger.
Inside parliament, the Social Democrat Alliance and Left-Green Party, planning to form the new government, eventually secured the support of the Progressive Party, whose backing for the planned minority coalition is vital.
'If everything goes as planned now a new government will take over on Sunday afternoon,' Steingrimur Sigfusson, head of the Left-Green party, told reporters after the Progressive Party announced it would back the new government.
The new prime minister is to be Johanna Sigurdardottir, of the Social Democratic Alliance and welfare minister in the outgoing government.
She is to become the first openly gay leader in the world.
The full cabinet list will not be formally announced until Sunday at about 1200 GMT, after the Social Democrat Alliance's central committee has met to approve the government deal.
A formal hand-over of power by the president from the old government would take place later.
Sigfusson said the government would propose April 25 for an early parliamentary election, a key demand of demonstrators.
SEEKING CHANGE
Haarde of the Independence Party quit on Monday after weeks of protests, which eventually turned violent.
A fresh, peaceful, demonstration was held on Saturday, with some calling for wider change, not just a shift in government.
Proposals have been made for a constitutional assembly that would overhaul the basic law, including a clearer divide between the executive and the legislature.
'You should be proud of yourselves, coming here weekend after weekend,' one of the organisers, Hordur Torfason, shouted.
'The current political system is done for, what we want is a new grassroots organisation that will come and take power,' said Einar Indridason, 40, attending the demonstration.
The new government wants to remove the central bank head, who was strongly criticised for failing to foresee the crisis.
The coalition is likely to have to tackle the issue of whether or not to start talks on entering the European Union, about which Iceland has long been cautious, but for which support has grown during the crisis.
The Social Democrats back EU entry, while the more cautious Left-Greens have said they may support a referendum on talks. Sigfusson has also backed a renegotiation of the IMF loan.
(Editing by Richard Balmforth) Keywords: ICELAND/ (patrick.lannin@reuters.com; +371 29 269 191; Reuters Messaging: patrick.lannin.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
REYKJAVIK, Jan 31 (Reuters) - A new centre-left government for crisis-hit Iceland expects to take office on Sunday after securing key political support and aims to lead the country to an election in April, parties said on Saturday.
Reminding politicians of the discontent that helped topple the previous centre-right prime minister, Geir Haarde, the first leader to fall as a direct result of the global crisis, some 2,000 people again demonstrated outside parliament.
The crisis, sparked after Iceland's fast expanding banks collapsed under a weight of debt, forced Iceland to take a $10 billion International Monetary Fund-led rescue package and caused widespread anger.
Inside parliament, the Social Democrat Alliance and Left-Green Party, planning to form the new government, eventually secured the support of the Progressive Party, whose backing for the planned minority coalition is vital.
'If everything goes as planned now a new government will take over on Sunday afternoon,' Steingrimur Sigfusson, head of the Left-Green party, told reporters after the Progressive Party announced it would back the new government.
The new prime minister is to be Johanna Sigurdardottir, of the Social Democratic Alliance and welfare minister in the outgoing government.
She is to become the first openly gay leader in the world.
The full cabinet list will not be formally announced until Sunday at about 1200 GMT, after the Social Democrat Alliance's central committee has met to approve the government deal.
A formal hand-over of power by the president from the old government would take place later.
Sigfusson said the government would propose April 25 for an early parliamentary election, a key demand of demonstrators.
SEEKING CHANGE
Haarde of the Independence Party quit on Monday after weeks of protests, which eventually turned violent.
A fresh, peaceful, demonstration was held on Saturday, with some calling for wider change, not just a shift in government.
Proposals have been made for a constitutional assembly that would overhaul the basic law, including a clearer divide between the executive and the legislature.
'You should be proud of yourselves, coming here weekend after weekend,' one of the organisers, Hordur Torfason, shouted.
'The current political system is done for, what we want is a new grassroots organisation that will come and take power,' said Einar Indridason, 40, attending the demonstration.
The new government wants to remove the central bank head, who was strongly criticised for failing to foresee the crisis.
The coalition is likely to have to tackle the issue of whether or not to start talks on entering the European Union, about which Iceland has long been cautious, but for which support has grown during the crisis.
The Social Democrats back EU entry, while the more cautious Left-Greens have said they may support a referendum on talks. Sigfusson has also backed a renegotiation of the IMF loan.
(Editing by Richard Balmforth) Keywords: ICELAND/ (patrick.lannin@reuters.com; +371 29 269 191; Reuters Messaging: patrick.lannin.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.