Cyprus's communist President Demetris Christofias swore in a new cabinet on Friday, giving fellow party member and new Finance Minister Kikis Kazamias the task of bringing the island back from the brink of economic meltdown.

Christofias reshuffled his government after a munitions blast killed 13 people and knocked out the Mediterranean island's biggest power plant on July 11, leading to rolling daily power cuts, economic disruption and public uproar.

"The government will take all the necessary actions and will take all necessary measures to tackle the difficult economic situation," Christofias said at the swearing-in ceremony.

"Our country is passing through critical times," he added, with eurozone member Cyprus having recently been downgraded by two international ratings agencies and increasingly touted as a possible candidate for an EU bailout.

Cyprus, which was already struggling to get its finances in order, was left reeling after the explosion, which all but crushed any hopes of economic growth this year.

The need for a new cabinet arose after centre-right party Diko abandoned its partnership with the Christofias on Wednesday, saying talks had collapsed over measures to address economic and political woes.