BERLIN, Oct. 24 (Xinhua) -- German Chancellor Angela Merkel and her coalition allies announced their coalition agreement and key ministry posts for the next German government on Saturday morning.

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

    The coalition agreement was reached after 12-hour long talks between Merkel's Christian Democrats, its Bavarian sister party, the Christian Social Union (CSU), and the FDP ended early Saturday morning.

    The agreement, 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.

    One of the key points of the coalition agreement is 24 billion euros (36 billion U.S. dollars) in tax cuts between 2011 and 2013,a compromise between the campaign promises of Merkel and Westerwelle.

    "That number is right," said CDU head Horst Seehofer at the joint press conference.

    The other key points of the agreement include an overhaul of healthcare funding and a reduction in compulsory military service from nine to six months. The agreement will be approved by congresses held by incoming coalition partners on Sunday and Monday.

    On the key posts of new government, Westerwelle assumes the position of deputy Chancellor and foreign minister, Wolfgang Schaeuble becomes finance minister, Rainer Bruederle takes over the economy ministry, Karl-Theodor zu Guttenberg heads the defence ministry, while Philipp Roesler, will be health minister, becoming the first Asian-born cabinet minister in Germany.

    Merkel will be reelected as German Chancellor by German Parliament next Wednesday and the new cabinet will be sworn in on the same day.