"The specific cuts have already been partly reviewed during the consultation process – who will get which tasks in which ministries. I can assure you that the participants probably did not sleep on the night when they looked at the table and probably are still not able to sleep," Michal said on ETV show "Aktuaalne kaamera" on Friday.

According to Michael, ministers, chancellors and heads of various departments are now reviewing the proposals and will each start to make their own suggestions regarding exactly how to achieve the targets set.

"I've been one who makes cutbacks. Our ministry (Michal is the outgoing Minister of Climate – ed.) has been one of the best. It's certainly a very difficult undertaking but let's hope it succeeds," he said.

Asked where the cuts would start to happen, Michal stressed that every percentage cut from the state and the public sector is crucial and that all areas have to be addressed.

"The only areas that we have agreed today [from where funds] will not be cut are teachers, members of the defense forces and police officers. So security, internal security and education. Otherwise, cuts will have to be made in all areas," Michal said.

"I hope that people will understand this and I can assure you that it will certainly mean a reduction of activities in some areas, and maybe jobs in some places. It is a difficult time. We need to spend a lot on security and on internal security, and this also means that the only way we can ask people and companies to make an extra contribution is if the state also tightens its strings. So, the two go hand in hand," he explained.

Michal also expressed hope that the need for tax increases will be understood, including by businesses.

"I hope they will understand. Times are hard. As (incoming Minister of Finance – ed.) Jürgen Ligi said, we have had to defense spending because our neighbor is aggressive and looking for ways into Europe to kill innocent people and conquer territories. We simply have no choice. If we want to survive as a country and as a nation, we have to invest in this, and Estonia has to be a country that is so secure, the enemy will not make a miscalculation. So, I hope that our voters will support and understand this," he said.

The incoming prime minister stressed that the government's goal is to get the economy growing. To that end, the money going to support Ukraine – €400 million over four years – will be channeled into Estonian industry. "This is a very considerable opportunity for Estonian industries to grow, for the economy to grow, and is also psychologically important. In addition, we are taking various steps so that new production and new services can be established more quickly. So from this comes growth and from that comes hope," he said.

Although the new coalition agreement emphasizes the need to develop industry, Michal said the IT sector is still important.

"Perhaps industry has indeed taken a backseat in the meantime, but we still have pretty good potential. The valorization of different raw materials with higher added value, providing additional production that is clean and exportable, the use of different materials, and the circular economy also, for instance. In fact, there is a lot of potential, which I can also say, coming from the climate field. And industry would certainly be one of the areas that could create more jobs throughout Estonia, so that we do not have to think about how we are going to pay subsidies or how we are going to manage, but so that we can all do better, so that we can get ahead. And IT, digital, is something that cuts across all areas, it is Estonia's great success story," Michal added,

Michal expressed hope that his government will be on that moves Estonia from a difficult situation to a more hopeful one.

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