After overnight talks, the three parties, Merkel's Christian Democratic Union (CDU), its sister party the Christian Social Union (CSU), and the SPD will present the 28-page blueprint to GroKo - Grand Coalition abbreviation in German.
Martin Schulz, the leader of the Social Democrats (SPD) said the parties needed to work together to strengthen Europe.
The agreement set out compromise positions on a wide range of issues, including taxes, education and health care.
Lueder Gerken of the Centre for European Policy Studies said that the promise of "a new start" for Europe sends "an important message" to Europe and especially Macron.
Left party chairwoman Sahra Wagenknecht said the deal would perpetuate "blatant social injustice", including Germany's precarious low-wage sector and poverty in old age, while business raked in "gushing dividends".
Politicians stayed up all night thrashing out a deal, with the talks lasting more than 24 hours.
"I think we achieved an excellent result", Schulz said.
The Christian Democrat Union (CDU) and the Social Democratic Party (SPD) have reportedly agreed on a program for government that includes a solidarity tax cut.
The VdK, representing 1.8 million members, also welcomed the prospective coalition's intention to fix acute shortages of nursing personnel for senior residents but said access to basic pensions for the poor was far from everyday reality.
Despite the deal, potential pitfalls remain, including upcoming votes by sceptical SPD delegates and then party members that could yet derail plans for another left-right "grand coalition", the constellation that has ruled Germany for the past four years and remains in charge as a caretaker government.
"We are working seriously. on creating the conditions to be able to live well in Germany in 10 or 15 years", she said.
After September's elections, questions were raised about Merkel's future and the long talks undermined her authority.
The document agreed today is expected to form the basis for formal coalition talks between the parties that could begin later this month and be concluded by March.
The three coalition parties' support dropped by a cumulative total of almost 14 percentage points in the election.
Merkel now leads a caretaker government, limiting her ability to take major policy initiatives as French President Emmanuel Macron pushes an ambitious European reform agenda. He also supports the creation of a finance minister and stand-alone parliament for the eurozone - ideas that are viewed with scepticism in Germany and did not appear in the coalition document.
"We want to strengthen the European Union financially, so that it can better fulfill its tasks: which is why we will take this into account during the preparation of our financial framework for the upcoming years", the 28-page document, which the two parties agreed upon, said.
"So I have no worries about us finding common solutions with France", she added.
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President", Napolitano continued, looking straight into the camera to address Trump directly, "this is not the way to go". Rand Paul (R-Ky.) and Ron Wyden (D-Ore.) have sponsored the Senate version of the USA RIGHTS Act .
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