The president said that while the period during which she should propose the formation of a new government is 14 days, the coronavirus crisis makes the matter more urgent, and so she has made the announcement today, Wednesday.

The president said Wednesday that: "The law gives the Head of State 14 days starting from tomorrow (Thursday - ed.) to make the proposal. But let's look around — what is the state of affairs? We have a virus crisis, causing the death of Estonian people daily. We have an economic crisis, which disrupts not one or two sectors, but the sense of safety of all of our people and their ability to cope. And there is the question of the trustworthiness of the state."

"The credibility of the state must be preserved and in many places also to be rebuilt in the eyes of our allies and partners," she went on, according to a press release.

The president has confirmed that she intends to meet with the Reform Party leader Wednesday.

The president said: "We do not have time in the current crisis situation to wait for the formal deadlines and to stretch time without good reason. Estonian people do not have time for it. I will meet with Kaja Kallas again already today (the pair had met Tuesday at Kadriorg - ed.), to discuss the situation."

Kaljulaid thanked Jüri Ratas for his time in office, adding that his resignation must have been a difficult decision to make.

Kersti Kaljulaid tweeted in English Wednesday evening that: "Prime Minister Jüri Ratas is stepping down. Tomorrow (Thursday - ed.), I will make a formal offer to to become the candidate for Prime Minister and begin forming a new government."

Prime Minister @ratasjuri is stepping down. Tomorrow I will make a formal offer to @kajakallas (@ALDEParty) to become the candidate for Prime Minister and begin forming a new government. pic.twitter.com/xqtfHKKceB

— Kersti Kaljulaid (@KerstiKaljulaid) January 13, 2021

President: Clear rules on party financing needed

Regarding the circumstances of Ratas' resignation, following corruption allegations which have hit the Center Party and a security services investigation into the issuing of last year's €39-million loan by state agency KredEx to the Porto Franco real estate development in Tallinn, the president said that rules regarding party finances needed serious review.

The president added that the suspicions stated yesterday in the wake of the ISS investigation into KredEx will also give the Riigikogu a clear lead in something that they must begin to discuss quickly, no matter what the next coalition looks like.

"I hope it will be one of the substantial topics of discussion of the parliament besides managing the effects of the virus crisis."

She also addressed all 101 members of Riigikogu, stressing that they have to decide the course Estonia will take.

"You will decide what values the governance of our state will carry. Let your internal compass guide you, because the people have chosen you for that reason. According to the constitution you are free in your mandate. You are free in your choices. Decide accordingly what would be best for Estonia today, tomorrow and the long-term future. I think it is reasonable if we all think about what kind of Estonia we want to leave to our children and grandchildren. Making these complicated choices and decisions both voting today and also hereafter," Kaljulaid said.

Reform gained the largest number of seats (34) at the 2019 general election, but found themselves locked out of the coalition discussions which led to the formation of the Center/EKRE/Isamaa government. In opposition with the Social Democratic Party (SDE) on 10 seats, the two parties lacked a sufficient number of seats to gain a majority at the 101-seat Riiigikogu.

What happens next?

The president said the existing government will not be dissolved until a new coalition enters office.

"The current government will continue working until the new government enters into office. But as Prime Minister Jüri Ratas rightly said already last night – if the government has announced standing down, then important political decisions will no longer be made. I sincerely hope that now also the plan to organise in the middle of the biggest virus and economic crisis a completely unnecessary referendum will be set aside. I am sure that the Riigikogu will find a different road today."

According to the constitution, when the prime minister resigns, the whole government resigns. So this marks the end of the current coalition with Center, EKRE and Isamaa, pending forthcoming coalition discussions.

Ratas will continue as caretaker prime minister until the new coalition is formed, which in theory could include the current lineup of Center, EKRE and Isamaa or additional parties, as well as one with the Reform Party.

Section § 92 of the Estonian constitution says that "the Government of the Republic resigns upon:

1) the first meeting of the new Riigikogu;

2) the resignation or death of the Prime Minister;

3) the expression of no confidence in the Government of the Republic or the Prime Minister by the Riigikogu.

The President releases the Government of the Republic from office at the time of assumption of office by the new Government."

If Kallas is successful, she will be Estonia's first female prime minister.

The Reform Party has 34 seats and is by far the largest party in the Riigikogu, but it needs 51 seats out of 101 to get a majority.

This article was updated to include comments by President Kersti Kaljulaid.

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