The document between the parties is two pages long, "Aktuaalne kaamera" reported on Sunday.

It reiterates the government's aim to increase defense spending to 5 percent of gross domestic product (GDP), but Prime Minister Kristen Michal (Reform) said the exact timeline will only become clear after meeting with the defense minister.

"From our perspective, this should proceed as quickly as possible, considering the current era and the threat posed by Russia. But it depends on what can be procured and at what pace. Some of the details — some of them likely to be classified — will be described by the defense minister in Tuesday's government meeting," he said.

The agreement also includes plans to move forward with a nuclear power plant and proceeding with auctions for onshore wind farms.

However, the decision not to tax corporate profits or personal income from the first euro will lead to further budget cuts to cover a €300 million deficit.

"I believe the cuts will be across various sectors. We included a specific statement in the agreement between delegations that pensions will not be cut. Other areas will likely be reviewed with this in mind," Michal told the show.

Eesti 200 chair and Minister of Education Kristina Kallas said areas where reductions can be made have already been discussed.

"We have actually agreed on a budget-cutting task, which involves cutting nearly 10 percent of state subsidies, operational costs, and labor expenses. This is a cut of over €300 million, and people are already feeling what that means. We still have two years ahead to implement these cuts. Making even deeper cuts in this way would mean shutting down actual services in the country, and I do not think that would be reasonable at this point," she said.

Kallas said alternative solutions must be found. Savings can be achieved, for example, by reducing bureaucracy, though this will certainly not amount to hundreds of millions of euros.

Next week, business leaders will meet to review various permitting processes, regulations, and reporting requirements.

The prime minister also noted that sustainability reporting requirements could be postponed, and there is a proposal in Europe to make them voluntary.

"Estonian companies have vividly confirmed that large firms spend hundreds of thousands on this, and it is unclear how much benefit it actually provides. So, removing such requirements and certainly replacing blanket inspections with risk-based ones, as I have previously suggested, is possible," Michal explained.

The coalition agreement still requires approval from both parties' boards and councils. Broader coalition agreement discussions will continue until May.

Kallas believes higher education and healthcare are likely to cause the most issues.

"All stakeholders know that our healthcare system, in its current form and with its current funding model, is simply unsustainable. The deficit keeps growing. We have been covering this deficit from reserves, but by 2029, there will be no reserves left. A very clear reform plan must be created, and implementation must begin rather than waiting for the next elections," she told "Aktuaalne kaamera."

Ministerial candidates should be finalized within the next two weeks. It is expected that only roles held by the Social Democrats – interior, health, rural affairs and infrastructure – will be replaced.

However, Kallas did not rule out the elimination of some ministerial positions altogether.

Coalition negotiations between the two parties began on Saturday (March 15), after SDE was kicked out of the previous coalition.

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