Lithuania's finance minister to lead caretaker government

By Andrius Sytas

VILNIUS (Reuters) -Lithuania's President Gitanas Nauseda appointed Finance Minister Rimantas Sadzius as acting prime minister on Monday until a new cabinet has been sworn in, following the resignation of Prime Minister Gintautas Paluckas.

The prime minister formally handed in his government's resignation, after announcing on Thursday he would step down amid pressure to do so over his business ties to a company owned by his sister-in-law.

"I instruct .... Rimantas Sadzius to act as prime minister until a new government is formed," Nauseda said in a decree published by his office.

Analysts expect that the next prime minister will also be picked by Paluckas' Social Democrat party, the largest group in parliament with 52 out of 141 seats.

Parliament, which must approve the selection, is due to next meet on September 10 after its summer recess.

With the Social Democrats lacking an overall majority, any successful candidate for prime minister will need to seek the support of their coalition partners, centre-left For Lithuania and populist Nemunas Dawn, which often disagree with each other.

Outgoing prime minister Paluckas had been criticised by opposition parties in the Baltic country for business dealings in which a company he co-owns sold electric batteries to another firm owned by his sister-in-law, in a deal financed by a government agency.

Paluckas has denied any wrongdoing.

The prime minister, in a statement on Thursday, said his past mistakes had hindered the work of his government, prompting his "quick and confident decision" to resign.

Paluckas' sister-in-law's company last month said it would decline the government funding but denied wrongdoing, saying it made purchases from Paluckas' business following an open tender.

The For Lithuania party on July 30 threatened to quit the ruling coalition unless Paluckas resigned, saying his position was untenable.

(Reporting by Andrius Sytas, editing by Terje Solsvik, Louise Rasmussen and Alex Richardson)

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