Harare - Zimbabwean President Robert Mugabe was due to hold more talks with his party Wednesday on the handover of cabinet posts to prime minister-designate Morgan Tsvangirai's party, as called for in Monday's historic power-sharing deal.

Instead of meeting Tsvangirai as scheduled to finalize the distribution of posts Mugabe met Tuesday with the politburo of his party, amid reports of some hardliners with his Zanu-PF refusing to hand over key ministries to Tsvangirai's Movement for Democratic Change.

On Monday, Mugabe, Tsvangirai and Arthur Mutambara, leader of an MDC splinter faction, signed an agreement committing themselves to sharing power in a transitional government, as part of a regionally- brokered initiative to end a decade of worsening repression and hardship under Mugabe.

The deal made Mugabe executive president and head of state with reduced powers, while Tsvangirai becomes prime minister and effective head of government.

Sources say that the MDC is prepared to let Mugabe hold the Defence Ministry, with control over the armed services, while insisting that the pro-democracy party take Home Affairs, giving Tsvangirai control over the police.

The agreement is seen as the last hope to pull the country back from the brink of collapse.

Inflation is put officially at 11.2 per cent but is estimated at several times that and the Zimbabwe dollar is worth only one thirty- thousandth of a US dollar, despite the Reserve Bank slashing ten zeroes off the currency under two months ago.

The Bank introduced a new 1,000 dollar note (10 trillion dollars in old money) in a bid to end cash shortages. The new note can only buy a loaf of bread.

"The zeros seem to be coming back no matter how often they slash them," said John Robertson, an economic consultant. "What we need in Zimbabwe is a clear change of policies. Start production and then inflation will start easing up." (dpa)