"Today marks a new history of democracy in this country," Rui Araujo said in his inaugural speech
Xanana Gusmao's resignation has been seen as an attempt to ease political instability in the tiny island state. The former prime minister, who led the nation to independence from Indonesia in 2002, does however remain in government as minister of planning and strategic investment
After East Timor won independence, Xanana Gusmao, a former guerrilla leader, became its first president and then its prime minister.
Former East Timorese Prime Minister Xanana Gusmao (R) speaks with his successor, former health minister Rui Araujo (L), at the Prime Minister's office in Dili on February 12, 2015
Rui Araujo, a New Zealand-trained doctor and popular opposition Fretilin figure, will lead just the sixth government since East Timor gained independence in 2002 from Indonesia after a long and bloody struggle against occupation.
The new administration, which will meet for the first time Tuesday morning, has been trimmed from 55 members to 33 in a bid to slash spending and boost efficiency.
Several ministers embroiled in past corruption scandals and others from the old guard have been replaced by fresh faces in what analysts describe as a significant shake-up.
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