Greek Prime Minister George Papandreou appointed a new finance minister Friday in a reshuffle to muster support for harsh economic reforms that have stoked violent unrest and split his ruling party.

The reforms are a condition for Greece receiving an international bailout to save it from a debt default that could unleash global economic turmoil.

Papandreou picked outgoing Defense Minister Evangelos Venizelos as new finance minister, jettisoning George Papaconstantinou, architect of a deeply unpopular belt-tightening program agreed in return for a bailout from the European Union and IMF.

Papaconstantinou becomes environment minister in the reshuffle.

The political upheaval and violent street demonstrations have pounded markets and drawn criticism from other European Union states, where policymakers are dithering over how best to keep funding Greece and forestall a credit event that could cause world economic havoc.

China weighed in again Friday, with Vice Foreign Minister Fu Ying saying it was vitally important Europe sorted out its debt mess. China's central bank earlier this week said the European debt crisis could spread and worsen.


Venizelos, a ruling PASOK party heavyweight, has held several cabinet posts in the past including those of government spokesman, justice minister and development minister.

In 2007, he challenged Papandreou for the party leadership.

The announcement of the new line-up had to be delayed until Friday morning, suggesting George Papandreou was struggling to find someone to take on the role of finance minister.

The problem is the finance minister's job. If it could be filled we wouldn't have these issues. This is the reason for the delay, said an Athens-based analyst who declined to be named.

Greek media reported Papandreou had proposed the finance minister's job to former European Central Bank Vice President Lucas Papademos but that the latter did not want the job.

While Papandreou struggled to implement the austerity measures, European Commissioner for Economic and Monetary Affairs Olli Rehn said that he believed Athens would get the next tranche of international aid in early July -- essential to fend off insolvency.

As I have understood, IMF can live with it -- that the fifth financing tranche can be paid now in these exceptional circumstances and uncertainty, he told the Friday edition of Finnish business daily Kauppalehti.

Thus we can assure for the short term that Greece will not fall into insolvency. That would have catastrophic consequences for Greece and very severe consequences for the stability of the whole Europe's economy.

The new cabinet is expected to be sworn in later Friday and a confidence vote is then due to be held by Tuesday night.

The government aims to pass the austerity package by the end of June and must then begin work on a new set of laws to implement it.

Three deputies have quit from Papandreou's Socialist Party in as many days in protest at a five-year, 28 billion euro ($39.59 billion) austerity package that the European Union and International Monetary Fund have set as a condition for more aid.

Two of the three abandoned Papandreou Thursday following a failed bid to form a unity government with the conservative opposition, but they will be replaced with party loyalists, leaving his thin parliamentary majority intact.

The protests against the measures, which include plans to raise 50 billion euros through privatizations, have combined with political infighting and euro zone indecision to severely spook international markets.


Analysts said even if the new government managed to win the confidence vote slated for Tuesday and passed the new reforms, the chances they would be able to effectively rein in a 340 billion euro debt load were diminishing.

If the political and social problems continue to deepen, then market pressures for a more immediate resolution to the crisis will build, Capital Economics wrote in a note.

And even if the pressures subside and some form of agreement can be reached next month, it seems very unlikely that this will amount to a decisive solution to Greece's fundamental economic and fiscal problems.

(Additional reporting by Renee Maltezou; Editing by Barry Moody)