Zimbabwe Finance Minister Tendai Biti slashed the government budget figures on Wednesday, saying revenues would be almost half the figure projected by President Robert Mugabe's cabinet in January.

He urged Zimbabweans to accept the grim realities of the revised budget, which will hamper the government's already limited ability to cope with 94 percent unemployment, world-record hyperinflation, and nationwide food shortages.

"Demands on the treasury are high and limitless. It is important for Zimbabweans to take a reality check. The reality of our economic situation is that it is grim," he said.

Biti took office last month when the Movement for Democratic Change (MDC) joined long-time President Robert Mugabe in a unity government, following nearly a year of political turmoil.

Biti presented a revised budget to parliament after a review by the MDC of the one unveiled in January by Mugabe's cabinet.

His new estimates showed that Zimbabwe's government revenue would be one-billion dollars, down from the $1.7-billion projected in the January budget.

"This is a loss of budgeted expenditure of 43 percent," he told parliament. "The task of turning around the economy becomes the toughest job of the inclusive government."

Biti's budget followed through on MDC promises to pay civil servants in foreign currencies. Bureaucrats, teachers, doctors and the military can now expect payments in US dollars, budgeted at $299-million.

He also budgeted $32-million for "vulnerable groups" such as child-headed families.

Zimbabweans are surviving largely on foreign aid, with international agencies distributing food rations to nearly seven million people ? the majority of the population.

A cholera epidemic has hit more than 91 000 people, killing more than 4000 people, but public hospitals only opened their doors after MDC leader Morgan Tsvangirai became prime minister last month.

Public hospitals and clinics still have little medicine or supplies, leaving international agencies to battle the cholera epidemic.

Tsvangirai has said that improving the economy is his top priority, and has moved to revive ties with the International Monetary Fund (IMF) and other lenders, while asking neighbouring countries for two billion dollars in assistance.

He has put the total cost of rebuilding the shattered economy at five billion dollars.

Biti said that the unity government was working to restore international relations strained after years of political violence and economic chaos during the last decade of Mugabe's rule.

"This inclusive government has to normalise relations with our friends in the East, the West, even underground. We have started major discussions with the IMF and the African Development Bank," Biti said.

"We have crafted our own policies. This economy is going to turn around," he said, but also warned: "We are in a difficult position as a country. I urge patience on the part of Zimbabweans."

An IMF team arrived in Zimbabwe last week, the first since December 2006 when the southern African country only narrowly avoided expulsion from the organisation.

Economic Planning Minister Elton Mangoma said last week that the initial talks were positive and that the IMF was ready to provide "immediate" assistance.

Western countries that are funding much of the aid operation in Zimbabwe say they will only offer new investments in the economy once Mugabe proves he is willing to work with Tsvangirai by taking steps that include the release of political prisoners.