BEIRUT: Lebanon's economy and basic services have reached the 鈥減recipice of collapse,鈥� US ambassador Dorothy Shea warned on Monday, as President Michel Aoun and Prime Minister-designate Najib Mikati engaged in dialogue to reach an acceptable formula for a new government.

Speaking after her meeting with Aoun and Mikati, the ambassador said the Lebanese were suffering and that every day without an 鈥渆mpowered government committed to and able to implement urgently needed reforms鈥� was a day in which the already dire situation slid further into humanitarian catastrophe.

鈥淲e urge those who continue to block government formation and reform to put aside partisan interests,鈥� she added.

The US welcomed the EU鈥檚 new sanctions framework to promote accountability and reform in Lebanon, with the ambassador also saying her country would 鈥渃ontinue to coordinate鈥� with its partners on appropriate measures.

鈥淟ebanon needs its leaders to take urgent rescue actions, and that can't happen without an empowered, rescue-focused government that begins to address the needs of the people and begins the hard work of economic recovery.鈥�

On Monday, information spread about French and US pressure on all parties in Lebanon to form a government.

The exchange rate dropped at the beginning of the week to LBP18,500 to the dollar despite the ongoing crises.

Consultations to form a government appear to have reached the stage of choosing ministers after an agreement to distribute portfolios to sects and political parties.

An agreement was reached last week between Aoun and Mikati to keep the sovereign portfolios in line with their previous distribution, with the Ministry of Finance going to the Shiites, the Ministry of Interior going to the Sunnis, and the Ministry of Justice going to the Maronites.

But Future Bloc MP Mohammed Al-Hajjar tempered the prevailing optimism.

鈥淲e will see how things play out at the end,鈥� he told Arab News. 鈥淭here is internal and external pressure on Aoun to facilitate the formation of the government.鈥�

He expressed concern about Aoun's attempt to 鈥渁bsorb these pressures by spreading an atmosphere of optimism and then going back on his promises.鈥�

On Monday, Aoun responded to political and popular demands for him to step down by stating that he would not resign.

He said he would carry out his duties until the end and that the president of the republic 鈥� 鈥渄espite the powers that he had lost鈥� 鈥� was a partner in the formation process with the prime minister-designate. The president had the right to choose from among the suggested names 鈥渋n light of his moral authority.鈥�

鈥淣o one will shake my stance or keenness to carry on what I have started in the fight against corruption.鈥�

Aoun accused some of seeking to obstruct the formation of the government, saying that strikes had disrupted trade, industry and production. He insisted on a criminal audit into Banque du Liban.

鈥淭he closer we get to the audit, the greater the pressure to prevent it. Corruption is the product of the mafia mentality, as facts have proven over the ages.鈥�

His remarks came as the Lebanese flag was lowered at the presidential palace in mourning for the victims of Sunday鈥檚 fuel tanker explosion in the Akkar region.

The Lebanese Red Cross found yet another charred body at the site of the incident, bringing the death toll to 29.

Efforts to agree on a new government have been spurred on by a fuel crisis that has brought much of the country to a standstill.

The tanker tragedy and the desperate fight for basic supplies such as fuel have exposed the deterioration of the state鈥檚 health and security sectors, with Hezbollah warning the extent of the chaos could worsen and calling for a government to be put together 鈥渋n any form and at any price.鈥�

The party's secretary-general Hassan Nasrallah said on Sunday night: 鈥淭he solution to the issue of lifting subsidies is to form a government that takes the appropriate decision. The situation in the country is intolerable. Let the formation take place within days.鈥�

Hezbollah has been blamed for not seriously pressuring its ally Aoun to form a government, but Nasrallah seemed to be addressing the president in his speech: 鈥淓nough. Give up your quotas. Form a government at any cost. Everyone must sacrifice.鈥�