The Panama Papers implicated several senior Icelandic politicians over offshore accounts, sparking protests outside parliament
Reykjavik (AFP) - Iceland's new rightwing government was to take office on Thursday, under fire from the start as the opposition sought a vote of no-confidence and maintained calls for a quick election to be held.
The new prime minister is 53-year-old Sigurdur Ingi Johannsson.
He was chosen Wednesday by his centre-right Progressive Party to replace Sigmundur David Gunnlaugsson, who resigned Tuesday amid mass protests over a hidden offshore account revealed in the so-called Panama Papers leak.
Gunnlaugsson will hand in his resignation to President Olafur Ragnar Grimsson at 1400 GMT, and the president will then formally appoint Johannsson and his cabinet at 1500 GMT.
Johannsson announced late Wednesday that new legislative elections would be held in "the autumn", about six months ahead of the scheduled April 2017 vote.
But protesters have demonstrated outside parliament for three days in succession, throwing eggs and yoghurt at the building.
They have called for the ouster of the centre-right coalition comprising the Progressives and the junior member Independence Party, and demanded elections be held sooner.
The cabinet reshuffle "is not what the people want," said Birgitta Jonsdottir, the founder of the libertarian Pirate Party which campaigns for more transparency in politics.
The Pirate Party has surged in the polls following the crisis, credited with a whopping 43 percent of voter support.
Johannsson, who held the important fisheries and agriculture portfolio in Gunnlaugsson's government, is meanwhile seen by critics as emblematic of the old guard that turned a blind eye to the reckless investments that brought down the banking sector in Iceland's 2008 financial meltdown.
The crisis plunged Iceland into a deep recession and left thousands mired in debt.
A poll at the end of March suggested that just three percent of voters had a favourable opinion of him.
After the announcement of the new government late Wednesday, the leftwing and centrist opposition parties agreed to forge ahead with their motion of no-confidence presented to parliament on Monday, even though it has no chance of being adopted because of the government's majority.
- Ministers hit by Panama Papers -
Two other Iceland cabinet ministers, including Finance Minister Bjarni Benediktsson, have been singled out in the Panama Papers.
Benediktsson, who is expected to hold on to his post, has denied any tax evasion. He said he built an offshore company to launch a real estate project in Dubai that never materialised, and the company has no business.
A poll published Wednesday showed that 69 percent of Icelanders wanted Benediktsson out, even though he enjoys the full support of the Independence Party he heads.
The government coalition does not want to hold a new election quickly given the uproar over the Panama Papers scandal, as it would surely suffer from a resounding protest vote.
Gunnlaugsson became the first major political casualty to emerge from the Panama Papers, resigning after the leak revealed that he and his wife owned an offshore company in the British Virgin Islands and had placed millions of dollars of her inheritance there.
The prime minister sold his 50-percent share of the company to his wife for a symbolic sum of $1 at the end of 2009, but he had neglected to declare the stake as required when he was elected to parliament six months earlier.
Gunnlaugsson has said he regretted not having done so, but insisted he and his wife had followed Icelandic law and paid all their taxes in Iceland.
The issue is particularly sensitive in Iceland, a country marked by the excesses of the 2000s when senior bankers used shell companies in tax havens to conceal their dealings in risky financial products which ultimately led to the 2008 collapse of the nation's three main banks.