* Govt to stick to plan to get EU/IMF aid *
Greek Finance Minister George Papaconstantinou's may lose his job in a cabinet reshuffle on Thursday, but the government will stick to the austerity policies he championed to ensure continued EU/IMF aid.
Analysts said Prime Minister George Papandreou, who has been struggling to muster support even within his own party for a new 5-year campaign of tax rises, spending cuts and sell-offs of state property, was likely to get his plan passed by parliament.
But they warned that a reshuffle, which could speed up the reform process by forming a more unified government, would not quell discontent among voters.
Athens must sign off on the measures if it is to receive more aid from the European Union and IMF and avoid default.
Analysts said naming a new cabinet made default less likely, as it meant Papandreou had rejected the prospect of bowing to opposition demands to renegotiate the bailout and was sticking to his plan of slashing the budget deficit by 28 billion euros through 2015.
"He will get a vote of confidence for the new cabinet and more than likely the plan is going to pass and the fifth instalment (of EU/IMF funding) will move forward," said Theodore Couloumbis, an analyst at think-tank ELIAMEP.
After a day of political manoeuvring in which he even offered to step down, Papandreou said on Wednesday night that he would form a new government on Thursday and seek the support of his socialist PASOK parliamentary group.
In particular, the prime minister may seek to replace Papaconstantinou, the main architect of hugely unpopular budget cuts demanded by the EU and the IMF as part of Greece's 110 billion euro bailout last year.
"He might need to give up his finance minister as a sacrificial lamb," a government official who wished not to be named told Reuters.
Party critics have blamed Papaconstantinou for the government's failure to meet targets under the EU/IMF bailout, including revenue and tax-collection goals.
MAGNETS FOR CRITICISM
"He will change Papaconstantinou, and I am also expecting some of his colleagues to be out of the government," said Costas Panagopoulos from pollsters ALCO, adding that he expected the government to keep its policies largely unchanged.
The government official also said he might have to give up some of his hand-picked choices for the cabinet, such as his foreign, environment and culture ministers who have been magnets for criticism.
Former ECB Vice-President Lucas Papademos is the man most frequently cited as a candidate to replace Papaconstantinou, who local media have said may be on his way to the Foreign Ministry.
But ALCO's Panagopoulos added that the prime minister may have a hard time convincing people outside the political arena to join his embattled government.
Other possible candidates mentioned by Greek media for finance minister are Defence Minister Evangelos Venizelos, who was in charge of preparing Athens for the 2004 Olympic Games, and Development Minister Mihalis Chrysohoidis.
One analyst said Papandreou's political moves on Wednesday were largely aimed at getting reluctant members of his own party into line.
"There was a form of Chinese torture with members of his parliamentary team indicating almost daily that they will not support him. He probably wants to put the fear of God into them and say if you don't support this government, then we go to elections," Couloumbis said.
Analysts also said the government's problems were unlikely to go away for long following the reshuffle after three weeks of daily protests in Syntagma square in central Athens.
"We will talk very soon again about early elections," said Panagopoulos. Greek opposition leader Antonis Samaras called on Wednesday for early elections.
"It could be even within this summer because the problem is coming from the policies (rather than the names). The people in Syntagma square are not going to be happy with just someone else at the Finance Ministry."
