All 21 ministers in the greatly reduced cabinet are either members or supporters of the president's party, Zanu-PF.
Not included is the leader of the independence war veterans, Chenjerai Hunzvi, whose followers have occupied hundreds of white-owned farms in recent months.
Where we are on the farms there is no-one who is going to
move us out of those farms |
Chenjerai Hunzvi, war veterans' leader
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In a challenge to the government, Mr Hunzvi told squatters not to move off the land they have occupied, as the government has asked them to.
He said the target of 200 farms the government plans to transfer in the first tranche of land transfers was not enough.
Fresh look
The outgoing cabinet had 44 members, more than twice as many ministers as in the new cabinet.
Most of the ministers have not been in government before, as Mr Mugabe tries to portray a fresh image after 20 years in power.
Mr Mugabe appears to have given in to pressure both from international donors and domestic critics to reduce spending and abolish some of Zimbabwe's ministries.
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The key Finance Ministry is one of those headed by a well-respected businessman, Simba Makoni.
BBC Harare correspondent Joseph Winter says Mr Mugabe will be hoping that his new finance minister can attract the return of donors, who have cut off aid in recent years. But there are fears that he may not be allowed to take the tough political decisions needed to rescue Zimbabwe's economy.
The casualties
The most prominent casualty is former Minister of Justice Emmerson Mnangagwa, who was defeated in the recent elections.
Another loser is the most recent minister of lands, Kumbira Kangi, who is currently facing charges of corruption.
War veterans
Chenjerai Hitler Hunzvi's call on war veterans not to leave white-owned farms is a direct challenge to the Zimbabwean Government, who earlier said that war veterans occupying farms which are not part of the government's redistribution programme will be shifted elsewhere.
Vice-President Joseph Msika on Saturday announced the final phase in the government's controversial plans to take over white-owned farms and redistribute them to black peasant farmers.
At a news conference he said the government would start resettling black farmers on 200 white-owned farms.
Ugly mood
Mr Hunzvi, leader of the association of veterans of Zimbabwe's liberation war in the 1970s, delivered a fiery and confrontational speech at a rally in Harare.
"Where we are on the farms there is no-one who is going to move us out of those farms."
Since February, war veterans have led landless blacks in the often violent occupation of 1,600 farms.
Mr Hunzvi said that no one should move until they were sure that the government's redistribution programme was working well.
Correspondents say the mood at the gathering was ugly. A black Zimbabwean journalist was beaten up because of his newspaper's perceived opposition to land redistribution.
At one point, Mr Hunzvi said any white farmer who opposed his followers would be buried "six feet under the ground".