Cyprus' cabinet has resigned in preparation for a reshuffle aimed at addressing an economic and energy crisis.
Caused by a munition blast that knocked out the island's main power station and killed 13 people, the economic and energy situation in Cyprus is so dire that it raised fears of a possible EU bailout.
However, Demetris Christofias, the Cypriot president, said he would not follow his cabinet in resigning over a destructive munitions blast earlier this month.
Christofias, facing the worst crisis of his career said on Thursday, "The people elected me, and it is to the people that I am accountable. Not to media."
The explosion, on July 11, destroyed the island's largest power plant and raised the possibility of an EU bailout.
Stefanos Stefanou, the government spokesman said Cyprus would not necessarily need help from the European Union to restore its economy.
But even before the onset of an energy crisis caused by the blast, borrowing costs had risen steadily because of Cyprus's exposure to Greek debt.
"Until now, Cyprus has managed to satisfy its financing needs until the end of the year. So don't take it as a given that Cyprus will be admitted into a support mechanism," he said.
Christofias will go ahead with the reshuffle soon after concluding consultations with the leadership of junior governing coalition party DIKO, government spokesman Stefanos Stefanou said.
The ministers will stay on until the reshuffle is completed.
The embattled president has been under pressure for a cabinet reshuffle after the ministers of defence and foreign affairs resigned over the explosion of seized Iranian munitions that were being stored at a naval base
near the power station.
Christofias, elected for a five year term in 2008, has also been under pressure from coalition partners, the Democratic Party or DIKO to create a broad-based unity government to tackle the crisis.
When he did not immediately heed the call last week, DIKO asked its two ministers on Wednesday to resign.
Christofias responded by asking all of the ministers to quit.
"The president of the republic briefed ministers of his intention to proceed with a broad reshuffle of the government and asked they place their resignations at his disposal," said Stefanou.
Thousands of Cypriots have protested over the blast, blaming state incompetence for allowing seized munitions to be stored near a power station in scorching heat.
The munitions, confiscated from a ship sailing from Iran to Syria in 2009, were stored a few hundred metres away from a power station on the south coast in often scorching heat, despite appeals from army officers for their removal.
Christofias has said an inquiry into the incident will also scrutinise his own role, though aides have repeatedly said he was unaware of the deteriorating storage conditions.
Credit rating downgraded
Cyprus has been left shellshocked by the explosion and any prolonged political wrangling threatens to derail much-needed economic reforms.
Preliminary finance ministry estimates suggest the blast will wipe out growth forecasts this year and Moody's on Wednesday cut Cyprus to three notches above junk.
Last week, Athanasios Orphanides, the island's central bank governor and European Central Bank governing council member said that without immediate action Cyprus might follow Greece, Ireland and Portugal in asking for a EU handout.
The cost of damage from the explosion and subsequent disruption from power cuts has been cited as anything between 1bn and 3bn euros.
The finance ministry has not given an assessment, but 3bn euros would represent 17 per cent of Cyprus's GDP.