Speaking to "Ringvaade suvel," Michal aid that the planned renewed coalition with Eesti 200 and the Social Democratic Party (SDE) aims to provide a degree of predictability in its actions for the next three years.

He said: "One always embarks with the best intentions."

"With the current coalition negotiations, we and our partners are trying to define cuts and tax changes, and more importantly, everything that depends on public authority, meaning what we can do to create new economic revitalization and new industries here, and how we can direct the aid from the Estonian defense industry going to Ukraine;" Michal went on.

Kristina Kallas, vice-chair of Eesti 200, meanwhile said that while finance and the state budget have been discussed, final agreements are still pending.

Kallas said: "The most difficult points are those which relate to the state budget and finances, how we can get the state's finances back on a sustainable path. We have not yet gone over these today. Although we have looked at them in terms of a framework several times, the most difficult agreements are indeed there."

Riina Sikkut, SDE's deputy chair, said: "Ultimately, a compromise must be reached. None of the parties will be completely satisfied, but I believe we will come to an agreement."

Erkki Keldo, Reform's Riigikogu chief whip, said that reaching an agreement this week would be "great," adding that since regulations allow more time, there was no need to hurry if that meant the agreement would not be as clear and comprehensible as possible.

On Estonia's economic competitiveness, Michal said, while there will be good news in this respect in the coalition agreement, given the current situation, expectations should not be set too high.

"Cuts are coming, and we also need to collect tax revenues because the budget is currently over two billion euros in deficit if we do nothing," he said.

In any case the parties aim to complete the coalition agreement by the end of this week.

Representatives of Reform, SDE and Eesti 200 have been holding talks since early last week, ahead of Kaja Kallas' formal resignation as prime minister, which took place on Monday.

The three parties discussed principles on how to stimulate the economy and reduce bureaucracy.

Assuming the coalition pact gets signed and voted in favor of at the Riigikogu, the same three parties will re-enter office, though ministerial portfolios will see a re-shuffle, and there will be a new prime minister.

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