Berlin  - Chancellor Angela Merkel presented her new coalition agreement on Saturday, saying it showed that Germany could look with confidence into the future.

"I believe we will be a good team," she told a joint press conference with Guido Westerwelle, head of her new political partner, the pro-business Free Democrats (FDP).

The chancellor's Christian Democrats, its Bavarian sister party CSU and the FDP cemented their coalition after marathon talks that ended in the early hours of Saturday.

The deal, which comes a month after Merkel's conservatives and the FDP won a parliamentary majority in a general election, paves the way for a new centre-right government to take office next week.

Key points of the coalition agreement are 24 billion euros (36 billion dollars) in tax cuts, an overhaul of healthcare funding and a reduction in compulsory military service from nine to six months.

Westerwelle has been designated as Merkel's deputy and will take over the post of foreign minister in the new cabinet, replacing Frank-Walter Steinmeier, whose Social Democrats were defeated in the September 27 election.

Economics Minister Karl-Theodor zu Guttenberg takes over from Franz Josef Jung as defence minister, while Interior Minister Wolfgang Schaeuble is to head the finance ministry.

The 16-member cabinet features nine new faces, among them Philipp Roesler, 36, a doctor who was born in Vietnam and adopted as a baby by a German couple. He takes over as health minister.

The incoming coalition partners are to hold party congresses on Sunday and Monday to approve the new agreement. Parliament is set to re-elect Merkel on Wednesday, with the cabinet to be sworn in the same day. (dpa)