UN Secretary-General Ban Ki- moon on Wednesday said the situation in Lebanon is deteriorating in his latest report on the implementation of UN Security Council Resolution 1701, UN spokesman Farhan Haq told reporters here. Adopted by the Council in 2006, resolution 1701 requires Israel and Lebanon to meet key obligations in order to sustain the end of hostilities. It includes provisions that call for respect of the dividing 'Blue Line' that divides both sides, the disarmament of militias operating in Lebanon, and an end to arms smuggling in the area Ban 'expressed his deep concern at the exchange of fire between the Lebanese Armed Forces and the Israel Defense Forces (IDF) that occurred on Aug. 3, adding that the Blue Line must be respected in its entirety,' said Haq. On Aug. 3, violence erupted along the UN-drawn border that resulted in the deaths of one Israeli soldier and four Lebanese, including a journalist. Meanwhile, resolving the issue of continued occupation by the IDF of the northern part of the Lebanese village of Ghajar and the adjacent area north of the Blue Line should be a priority, the secretary-general noted. 'The UN Interim Force in Lebanon (UNIFIL), stands ready to facilitate such a withdrawal,' said Haq. Ban also expressed 'deep concern' over the widespread proliferation of weapons in Lebanon and incidents that have impeded UNIFIL's freedom of movement, the spokesman added. 