Vilnius - The first sitting of a new Lithuanian parliament took place Monday afternoon with the incoming centre-right coalition administration announcing its list of policy priorities and likening the situation it inherits to a "time bomb".

"We just have to imagine that there is a time bomb ticking. Like in a good thriller... we are trying to find the particular wire which should be cut to stop the mechanism. It is risky, yet it would be much worse to do nothing," said Andrius Kubilius, the incoming prime minster at a news conference Monday.

A formal coalition was signed in the morning by the leaders of four political parties who triumphed in October's general election: the Homeland Union - Christian Democrats of Kubilius, the National Resurrection Party, the Liberal Movement and the Liberal and Center Union.

As is the custom in Lithuania, the new coalition also gave itself a name. It will be known as the "Coalition of Changes" but in one of the many quirks of the Lithuanian political system, it will not formally take power until first the government itself and then Kubilius' candidature have been rubber-stamped by Seimas, the Lithuanian parliament.

Until that process is complete, which could take up to two weeks, the outgoing government of Gediminas Kirkilas will continue in a caretaker capacity.

The coalition agreement spells out the measures that will be taken to tackle a worsening economic situation. After a decade of growth, the Lithuanian economy has slowed markedly in recent months and there are fears that the largest of the Baltic states will slide into recession in 2009.

In a populist move, the new administration will cut the take-home pay of politicians by around 15 per cent from mid-2009 and will tighten controls on their tax-free benefits and other perks.

Spending on salaries in local governmental will also be cut. While teachers will get a pay rise, it will be at less than half the level promised by the outgoing administration, which is likely to spark protests from teachers' unions.

Other austerity measures will be taken in an effort to cut public spending by around 1.9 billion dollars.

The most eye-catching move of the new administration is its decision to split the Economy Ministry into two distinct ministries; an Energy Ministry and a Ministry of Innovation, Business and Labour.

The move underlines the importance of energy as a key political and social concern in Lithuania.

With its sole nuclear power station, which supplies up to 70 per cent of Lithuania's electricity, due to be decommissioned by the end of 2009 as part of an agreement with the European Union, there are fears Lithuania will be plunged into an energy crisis.

A replacement nuclear plant is due to be built with Estonia, Latvia and Poland, but it is unlikely to be ready before 2015.

Other measures announced by the coalition include the renaming of the Social Affairs and Labor Ministry as the Family and Social Affairs Ministry and departments responsible for labour issues will fall under the remit of the new Ministry of Innovation, Business and Labour.

The Agriculture Ministry is to have its remit broadened to become the Ministry of Rural Affairs.

The coalition also confirmed its intention to install former TV game show host Arturas Valinskas as parliamentary speaker. (dpa)