Tunisia's Islamist Prime Minister Ali Larayedh resigned on Thursday, Jan 9, to make way for a caretaker government in an agreement with secular opponents to complete the country's transition to democracy, according to Reuters.

Three years after its uprising against autocrat Zine el-Abidine Ben Ali, Tunisia is in the final stages of establishing a full democracy before new elections that would be a rare bright spot in an unstable region.

Tunisia's new premier, technocrat Mehdi Jomaa, must tackle subsidy cuts sought by international lenders to curb the small North African country's deficit and also confront a growing threat from Islamist militants.

Illustrating the continued fragility, troops in the southern city of Tatouine fired into the air and police used tear gas on Thursday to disperse protests over economic hardship.

To end months of political crisis, Larayedh's moderate Islamist party Ennahda agreed late last year to a deal to hand over to an independent cabinet led by Jomaa, who will govern until the election.

"I have just handed my resignation to the president," Larayedh told reporters. "The president will appoint the new prime minister, Mehdi Jomaa, shortly and he will present his new cabinet in the next few days."

One of the most secular countries in the Arab world, Tunisia has struggled with divisions over the role of Islam and the rise of Islamist radicals since the uprising in 2011 that inspired other revolts in the region.