Iceland Eyes New Govt, President To Hold Talks

Then the old and new government would return later to the president for the formal handover of power.

Iceland's president called politicians to his office on Sunday for an update on talks to form a new centre-left coalition for the crisis-hit island nation, with a government expected to be announced later.

The crisis, which has seen Iceland's fast-expanding banks collapsing under a weight of debt, forced the country to take a $10 billion IMF-led rescue package and sparked widespread anger, including protests that eventually turned violent.

The Social Democratic Alliance and the Left-Green Party are forming the new government after centre-right prime minister, Geir Haarde, quit on Monday after the protests. He became the first leader to fall as a direct result of the credit crunch.

The office of President Olafur Ragnar Grimsson said the head of state would meet Social Democratic Alliance chairwoman Ingibjorg Gisladottir so she could explain the outcome of the governent talks. He would then meet with the prospective new prime minister, Johanna Sigurdardottir.

Sigurdardottir's assistant, Hrannar Arnarsson, told Reuters he expected the government announcement to be made after the meetings at the president's office, at about 1600 GMT.

Then the old and new government would return later to the president for the formal handover of power.

In Iceland, the president has the job of giving politicians the mandate to form a new government. Any handover of power also takes place via the president.

The new government aims to lead the country to an election in April and has said it wants to remove the head of the central bank, widely criticised for failing to prevent the crisis.

Sigurdardottir was welfare minister in the former government and is set to become the first openly gay leader in the world.

Left-Green Party leader Steingrimur Sigfusson said on Saturday that the new government would propose April 25 for an early parliamentary election, a key demand of demonstrators.