Estonia's incoming government will support Ukraine until "victory” in its war with Russia, Prime Minister Kirsten Michal told Reuters in an interview on Tuesday, pledging continuity on the issue with the former administration.

Michal, 49, has replaced Kaja Kallas, who recently resigned to become the European Union's foreign policy chief after emerging as one of the strongest critics of Russia and supporters of Ukraine in the European Union and NATO.

"We will support Ukraine until the victory of Ukraine in this war. We are in this for a long term, I hope our allies are too," Michal told Reuters after taking the oath of office.

"The message to our enemies is that Estonia is well-defended, we will increase our (defence) expenditure," he added.

The government of the Baltic nation of 1.4 million could seek to raise about one billion euros ($1.09 billion) to purchase ammunition for Estonia, under a plan that will be hatched out by September, Michal said.

Tackling stalling growth is another priority, after about nine to 10 quarterly declines in gross domestic product, Michal told Reuters.

Estonia's export-driven economy has been hit by weak demand in its main trading partners, as well as a decline in its energy producing sector which has become uncompetitive, according to an analysis from Sweden's Swedbank. The bank expects the economy to pick up next year as its exports recover.

"This is the main focus of the government", said Michal.

An updated agreement with its coalition partners, suggests the parties may raise taxes and cut government spending to reign in the deficit, which is projected at 3.4% of GDP in 2024, public broadcaster ERR said.

Michal is from the same liberal Reform party as Kallas and will lead his predecessor's centre-right majority coalition with the liberal Estonia 200 party and the Social Democrats.

Educated as a lawyer, Michal has climbed the ranks of the Reform party since 1996. He first entered parliament in 2004, and has led Justice Ministry, Economy Ministry and, most recently the Climate Ministry.

The next election in Estonia is scheduled for 2027.