Donors Pledge £2.3bn to Lebanon

International donors today pledged $4.6bn (£2.34bn) in aid and loans for Lebanese reconstruction following last summer's war between Hizbullah guerrillas and Israel.

Experts at a conference of donors, held in Paris, predicted that funds offered to one of the world's most indebted countries in the form of debt relief, low-cost loans and aid could reach $7bn.

Lebanon has $40bn of state debt, which equates to around 185% of its annual economic output.

Jacques Chirac, hosting the conference, calledLebanese prime minister Fuad Saniora's reform plan "courageous", while the World Bank president, Paul Wolfowitz, said it was "ambitious, comprehensive and coherent".

The UN secretary-general, Ban Ki-Moon, urged donors to "favourably and generously" support the reform plan.

The conference came amid concerns that recent violence in Lebanon could dent nations' willingness to donate.

Mr Siniora's government is locked in confrontation with Hizbullah and its allies, struggling with debt and facing the task of rebuilding following the 34-day conflict, which left parts of southern Lebanon in ruins.

"Your support will be essential in seeing Lebanon through," Mr Siniora told the conference. "The cost of failure is too great to contemplate." He added that Lebanon was "on the verge of a deep recession".

The Saudi foreign minister, Prince Saud al-Faisal, said his country would channel $1bn in development funding and an additional $100m grant for the Lebanese government.

Mr Chirac, the French president, said half a new $650m loan from France would be extended this year. The European commission pledged around $649m in loans or aid.

The US secretary of state, Condoleezza Rice, said the Bush administration would seek $770m for a new comprehensive package of which "a substantial part would be grants, not loans".

That money must be approved by the US Congress, and would more than triple US economic aid to Lebanon. Britain also announced new $48m funding for a UN refugee agency.

Mr Siniora's critics said donors would worsen Lebanon's debt and would be pouring good money after bad.

Last year, the British and US governments were criticised for failing to bring about an early ceasefire to the summer conflict, which left hundreds of people dead.