The center-left Social Democrats have been negotiating with the Green party and the pro-business Free Democrats since narrowly winning a national election on Sept. 26.
If approved by party members in the coming weeks, the three-way alliance would replace the current grand coalition of Social Democrats and outgoing Chancellor Angela Merkel’s Christian Democrats.
Merkel, who didn't run for a fifth term, is likely to be succeeded by current Finance Minister Olaf Scholz of the Social Democrats.
The negotiations over the unprecedented three-way alliance were relatively harmonious and speedy compared to previous coalition talks. But the political transition — with Merkel as caretaker — has hampered Germany's response to the latest rise in coronavirus cases.
Few details have emerged from the closed-doors talks, including how the parties will divide up the ministerial portfolios.
A preliminary agreement last month indicated that Germany would bring forward its deadline for ending the use of coal-fueled power from 2038 to 2030, while expanding the rollout of renewable energy generation.
At the Free Democrats’ insistence, the prospective partners said they won’t raise taxes or loosen curbs on running up debt, making financing a central issue.
Merkel's center-right Christian Democrats are currently preoccupied with a leadership contest over who is become their next leader and revive the party's fortunes after it suffered its worst-ever election result.