BERLIN - Chancellor Angela Merkel on Saturday finished building a new centre-right government for Germany and announced an overhaul of the health care system, more help for families and tax cuts of up to C24 billion over the next four years.
Merkel said the coalition of her Christian Democrats, their Bavarian sister party the Christian Social Union and the pro-business Free Democrats are capable of solving the country's problems following their victory in last month's parliamentary elections.
Guido Westerwelle, the leader of the Free Democrats, said at a joint news conference with Merkel that the coalition agreement was "a great compass for our country."
He added that he wants all nuclear weapons to be pulled out of Germany -- an issue that may prove vexing to the country's NATO allies, including the United States. Merkel made no immediate pledge on that issue.
The coalition agreement is expected to be approved and signed on Monday.
The chancellor announced some new members of her new cabinet, while Westerwelle said he would present the Free Democrats' ministers to his party first and announce them later in the day to the public.
Westerwelle himself is expected to take over the posts of foreign minister and vice chancellor.
Merkel said that current Economy Minister Karl-Theodor zu Guttenberg will become the defence minister tasked with handling Germany's unpopular mission in Afghanistan. He replaces Franz Josef Jung, who is to take over at the Labor Ministry.
Germany's veteran interior minister, Wolfgang Schaeuble, was expected to take the key position of finance minister, a move that would put the 67-year-old member of Merkel's party in charge of tending Germany's strained budget as her new government tries to balance tax cuts and fiscal discipline.
Ahead of the Sept. 27 elections, both parties advocated tax cuts in an effort to spur economic growth. However, they differed on how far to go at a time when efforts to combat the economic crisis have pushed up debt.
Schaeuble is one of Germany's most experienced politicians. He has been interior minister since 2005 in Merkel's outgoing coalition of right and left, his second stint as the country's top security official.
Schaeuble has championed tougher security laws, in particular anti-terrorism legislation granting federal police the power to spy on computers.
Ursula von der Leyen, one of the nation's most popular ministers, is expected to retain her post at the Ministry for Family Affairs, while the Health Ministry is to go to the youngest minister in the Cabinet, 36-year-old Philipp Roesler of the Free Democrats.
The new Economics Minister is to be Rainer Bruedele, also from the Free Democrats.
A cornerstone of the coalition agreement is reform to the nation's health care system. It is expected to include a freeze on employers' contributions, meaning individuals will carry the burden of any cost increases.
Child benefits and tax write-offs for families with children are to be increased in 2010, making good on an election promise by the Free Democrats to ease the burden on families.
Westerwelle's call to remove nuclear weapons from Germany echoed calls made by then-Chancellor Gerhard Schroeder's Social Democrats in 2005.
During the Cold War, the United States based nuclear weapons in Germany as part of its deterrent against Warsaw Pact forces. Since the Berlin Wall came down in November 1989, it has removed 95 per cent of those weapons.
The previous call to remove the weapons drew concern among North Atlantic Treaty Organization members, and any concerted effort to take up the issue again would require negotiations with those members. Merkel said the withdrawal would only be carried out after "talks with our partners."
The U.S. has not said how many nuclear weapons are still in Germany.
