Zimbabwe's prime minister, Morgan Tsvangirai, has taken an important step toward establishing the new power-sharing government's credibility by fulfilling a commitment to pay the army and other public-sector workers in dollars because the national currency is worthless.

Foreign diplomats had questioned whether Tsvangirai would be able to find the estimated $100m (£70m) required to meet the public sector's 130,000-person payroll given the dire state of Zimbabwe's economy. But the new finance minister, Tendai Biti, said he had "juggled" the books and soldiers have received $100 each. Civil servants, teachers, doctors and nurses will all have been paid a similar amount by the end of the week.

Although relatively low compared to what Zimbabwean professionals used to earn, $100 is a small fortune against the near worthless wages they had been receiving. Teachers were paid several trillion Zimbabwe dollars a month but inflation, which is above 10 sextillion (10 billion trillion) percent, wiped out the currency's value. Almost all shops in Zimbabwe now accept payment only in US dollars or South African rand.

Biti told a press conference that the hard currency payments are intended to get schools and hospitals functioning again after many teachers and health staff stopped going to work because they were paid so little, in many cases not enough to cover the transport costs of getting there. Many government workers have also been unable to feed their families and are among 7 million Zimbabweans, about two-thirds of the population remaining in the country, reliant on foreign food aid.

"We have to get Zimbabwe working again; getting teachers to school is part of efforts to get Zimbabwe to work again, having examination papers being marked is part of having Zimbabwe work again," Biti said.

Tsvangirai had appealed to civil servants to return to work on Monday. A Movement for Democratic Change (MDC) official said that some did but that the numbers at work today have risen with the payments – although it is feared that many have fled abroad in search of employment, particularly to South Africa.

The US dollar pay will be particularly important in winning support among the rank and file of the military for Tsvangirai's authority over the new administration in which Robert Mugabe remains president and both men oversee the cabinet. The military service chiefs have been particularly hostile to the MDC leader's inclusion in the government but it may be more difficult for them to move against him if the ordinary soldiers stand to lose.

Biti also scrapped expensive licenses for shops to do business in foreign currency. But he has previously said that the use of US dollars and rand is a temporary measure and has dismissed a proposal by some in Mugabe's Zanu-PF party for Zimbabwe to adopt the South African currency permanently.

For now, though, the Zimbabwe dollar is a pariah currency. The country's dilapidated power and water utilities have started charging in US dollars. Even the state-run Herald newspaper, which continues to be highly partisan toward Mugabe, can only be bought using foreign currency except at its head office, where it costs Z$1tn.

Biti said that the free use of hard currency should curb inflation.

"Now that the country has embraced the use of multiple currencies which are relatively stable, the government expects all businesses to act responsibly on pricing ... in order to create the necessary confidence in the economy."