STOCKHOLM, Oct 18 (Reuters) – Sweden’s new right-wing prime minister, Moderates leader Ulf Kristersson, appointed party colleagues Elisabeth Svantesson as finance minister and Tobias Billstrom as foreign minister in his minority coalition on Tuesday.

Sweden’s parliament confirmed Kristersson on Monday after more than month of talks to forge a coalition agreement and agree a policy platform with the anti-immigration Sweden Democrats, who will support the government in parliament.

The new right-wing government faces a number of major challenges.

The economy is heading into a recession and inflation is running at nearly 10%.

Russia’s war in Ukraine has destabilised the Baltic region – Sweden’s backyard – and the government needs to find the funds to boost military spending to 2% of GDP, as well as easing the pain of sky-high electricity prices and cutting taxes.

Meanwhile, Turkey could still block Sweden’s application to join NATO.

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“It’s a very tough situation which could get considerably worse,” Kristersson told parliament when outlining his government’s agenda.

Pal Jonson, alJso from Kristersson’s Moderates, will be the minister of defence.