New Estonian government takes shape amid economic gloom

New Estonian government takes shape amid economic gloomTallinn - The form of a new government coalition in Estonia was emerging Friday - as new figures suggested the country will experience an even deeper recession than previously expected.

Data released by the national statistics office Friday showed retail sales down by 15 per cent year-on-year in April, while industrial output plunged 34 per cent during the same period.

However, incumbent Prime Minister Andrus Ansip looks set to stay in power despite the collapse of his coalition government a week ago.

Talks involving the two ruling parties - Ansip's Reform Party and the Pro Patria/Res Publica Union - plus the opposition People's Union party reached an agreement Thursday night that will see the People's Union join a new three-party coalition.

The addition of the People's Union's 6 MPs will also restore Ansip's working majority in the Estonian parliament or Riigikogu.

The agreement is due to be endorsed by the parties involved and given the blessing of President Toomas Hendrik Ilves in the next few days.

In return for its involvement in government, the People's Union will take control of two important ministries: the Finance Ministry and Interior Ministry.

On May 21, Ansip announced that he was ejecting the Social Democrat party from his three-party coalition, which has been in power since April 2007.

The Social Democrats had disagreed with Ansip over the need for reforms to employment law as the government seeks to impose severe curbs on spending.

After a decade-long boom, the small Baltic state became the first country in the European Union to slip into recession in 2008.

The Ansip government has identified adoption of the euro as the national currency at the earliest opportunity as its main goal. (dpa)