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Lebanon's President Michel Aoun heads a cabinet meeting at the presidential palace in Baabda Image Credit: Reuters

As Lebanon grapples with its worst economic and financial strains in decades, foreign donors have said they will only help if the government enacts long-stalled reforms.

Aoun said he had a phone call with French President Emmanuel Macron and the two would speak again in the next few days.

"A number of states have expressed their desire to help Lebanon, with France at their forefront," Aoun's office quoted him as saying on Saturday in an interview with French magazine Valeurs Actuelles. It did not elaborate.

The new Lebanese government has approved a rescue plan that envisages seeking foreign help, calls for interest rate cuts, and warns some "painful steps" will be necessary, according to a copy seen by Reuters on Thursday.

The policy statement will be presented to parliament next week for a vote of confidence.

Prime Minister Hassan Diab's cabinet was formed last month with the support of the Iran-backed Hezbollah movement and its political allies, which hold a parliamentary majority.

The government must contend with a liquidity crunch, shattered confidence in banks, a weakened Lebanese pound and soaring inflation.

It took office some three months after Saad al-Hariri's government resigned under pressure from nationwide protests against a ruling elite accused of corruption.

Hezbollah won't interfere in US-Iran conflict:

Lebanese President Michel Aoun announced that Lebanon will not accept to be a victim in the conflicts between the US and Iran, a statement by the office of Lebanon's President said.

"Everybody believes that Hezbollah may interfere in any potential conflict between the US and Iran but I can guarantee that Hezbollah will respect UN Security Council Resolution 1701," Aoun was quoted as saying by Xinhua news agency.

Aoun said that Hezbollah has its ministers and members in Lebanon's parliament but this does not mean that Lebanon's sovereignty is violated by the Shia political party.

'Painful steps'

Lebanon's government on Thursday approved a rescue plan to pull the country's from its worst financial crisis in decades, including interest rate cuts, recapitalisation of banks and other "painful steps", according to a copy seen by Reuters.

The 17-page plan - which also includes appeals for help from foreign donors - will be presented to parliament next week for a vote of confidence, the speaker's office said.

Prime Minister Hassan Diab's new government is facing a liquidity crunch, shattered confidence in banks which have imposed informal controls, a weakened Lebanese pound and soaring inflation.

The cabinet was formed last month by the Iran-backed Hezbollah movement and its political allies, which hold a parliamentary majority. It took office nearly three months after Saad al-Hariri's government resigned under pressure from mass rallies against a ruling elite that protesters blame for decades of waste and corruption.

In its statement, Diab's government pledged to come up with an emergency plan by the end of February that addresses people's needs and the country's debt maturities. It said some "painful steps" would be necessary while vowing to curb the impact on those with limited income.

The policy plan - which had minor changes from a draft seen by Reuters on Sunday - said banks must use their reserves and sell their investments abroad to help restore the sector's stability.

It envisaged foreign donors providing soft loans, though it did not name any institutions or say how much was required.

Finance Minister Ghazi Wazni's office said he would meet a World Bank delegation on Friday.

Foreign donors say they stand ready to help only if Lebanon's government implements long-stalled reforms.

Hezbollah's parliamentary bloc said on Thursday that decisions on the country's debt maturities in coming months would need national consensus.

"Radical (moves)... require a national decision and popular understanding," it said in a televised statement.

Cash-strapped authorities are struggling to decide whether to repay a $1.2 billion Eurobond maturing in March, political and banking sources told Reuters this week.

Diab urged European states to open a credit line and provide aid. "Lebanon needs urgent help today at various levels, power, food supplies, raw materials," he told a meeting of European ambassadors.

The U.N. Special Coordinator for Lebanon, Jan Kubis, said this week that a clear and transparent action plan was needed.

"If you don't help yourselves, why do you expect assistance from the outside world?" he told local media.