COLOMBO (REUTERS, AFP) - Newly elected Sri Lankan President Gotabaya Rajapaksa on Wednesday (Nov 20) named his brother Mahinda Rajapaksa as Prime Minister, cementing the grip on power of a clan credited with crushing the Tamil Tigers a decade ago.

Mahinda Rajapaksa, a two-term president himself, is due to be sworn in as premier on Thursday following the resignation of Ranil Wickremesinghe after his party suffered a humiliating defeat at the weekend's presidential polls.

Wickremesinghe formally announced his resignation Wednesday clearing the way for the Rajapaksas to form a minority government ahead of possible snap elections early next year.

Former defence minister Gotabaya Rajapaksa was elected president on Nov 16 as the candidate of the party of his brother Mahinda Rajapaksa, who served as president from 2005-2015.

Gotabaya Rajapaksa defeated the candidate from Wickremesinghe's party.

A spokesman for the new administration said Mahinda Rajapaksa, 74, will be sworn in by his younger brother Gotabaya Rajapaksa, aged 70.

"Prime Minister Rajapaksa will have his cabinet appointed shortly after taking his oath of office," said spokesman Vijayananda Herath.

Sri Lankan media have reported that the new president would soon name an interim cabinet to govern the country until a parliamentary election expected around April.

The presidential election was overshadowed by Sri Lanka's deepest economic slump in over 15 years after Easter Sunday attacks on hotels and churches killed more than 250 people.

This caused a crisis in the tourism sector, a vital source of foreign exchange.

Islamic State of Iraq and Syria (ISIS) claimed responsibility for the attacks.

The new president, who oversaw the defeat of Tamil separatists as his brother's defence minister 10 years ago, won the election after promising to secure the country against militant threats.

Under the Sri Lankan constitution, Wickremesinghe's government will be dissolved following his resignation.

Neither Wickremesinghe's UNP nor Mahinda Rajapaksa's SLPP have an absolute majority in parliament to form a government.

Mahinda Rajapaksa attempted to return to office last year as prime minister but was blocked by a court.

The new president is expected to appoint a 15-member interim cabinet until the parliamentary election, when his brother is expected to seek the post of prime minister.

Some local media reported on Wednesday that the president would name his brother Mahinda as interim prime minister until the election.

In his first set of appointments, Gotabaya Rajapaksa on Tuesday named P. B. Jayasundera, who was treasury chief under his brother, as his secretary, and tapped his close ally Kamal Gunaratne, a military general, as defence secretary.

Rajapaksa's election has raised hopes among investors that the island nation's economy would recover. The main stock index has risen 1.9 per cent and the Sri Lankan rupee has gained 0.5 per cent in the past three sessions.

"What is expected from Rajapaksa was the political stability and the change in the cabinet will help that sentiment and the market will see it positively," said Dimantha Mathew, head of research at brokerage firm First Capital Holdings.

Some rights groups and some Sri Lankan minorities, however, accuse the Rajapaksas of human rights violations during the end of the 26-year civil war and have expressed concerns of renewed ethnic tensions on the diverse island, following the elections.

The Rajapaksa brothers have denied any wrongdoing.