FINANCE Minister Tendai Biti has warned of a "long winter of despair" for the country saying there is a real danger of the virtually broke government shutting down completely down as early as October.

Biti made the warning on Tuesday as he presented his midterm fiscal policy statement that showed the country’s budget deficit hitting US$700 million this year, largely because of an unbudgeted salary increment for government workers.

The statement was a reality check for Zimbabweans who were becoming optimistic about the country’s economic recovery and future prospects.

"Zimbabweans must brace themselves up for a long winter of despair,” Biti said.

Although macroeconomic fundamentals remained stable and the 9.3 percent growth projection for this year was still on track, unbudgeted expenditures seem to have complicated matters for Biti.

The recent public servants’ salary increases, which would require an additional US$262 million, and other unbudgeted expenditures amounting to $500m would put a further strain on the $2, 7 billion budget for this year.

But the minister remained optimistic that the economy will continue with its positive growth that began in 2009 when President Robert Mugabe formed a unity government with his former opponents.

“The real problem is not in 2011, it is in 2012 because we are going to start off with a budget of US$2 billion and US$1.1 billion on anything else,” he said.

“The real gnashing of teeth will be in 2012 and you must brace for a long winter of despondency,” Biti said.

“More importantly, there is a real danger of government running completely down as early as October 2011.

“We are likely to run monthly cash deficits and we shall face difficulties in covering obligatory expenditure commitments."

But the minister unveiled a cocktail of measures aimed at protecting local industry from cheap imports.