Hezbollah, a heavily armed Shi'ite Muslim group backed by Iran, has been pressing a demand for one of six Sunni Muslim lawmakers allied to it to get a cabinet position. Hariri has refused to give up one of the seats allocated for his mainly Sunni party.
"The truth is that government formation has hit a big obstacle," he told a televised news conference in Beirut, six months after a parliamentary election that triggered complex negotiations to form a government.
"The consequences that the country will bear is upon Hezbollah's responsibility" if a new government cannot be formed, Hariri added in English.
He said that if Hezbollah was so concerned that one of its Sunni allies take a cabinet post, it should give them one of its own. Hezbollah, proscribed as a terrorist movement by the United States, is expected to take three ministries in the new cabinet.
A new government must be formed before any moves can be made towards fiscal reforms, which the International Monetary Fund (IMF) said in June are needed immediately to improve debt sustainability in Lebanon. Reforms would also unlock more than $11 billion of donor funding.
Lebanon has the world's third largest public debt as a proportion of the economy, stagnant growth and what the IMF has said are increasing vulnerabilities in its financial system.
"The economic situation is embarrassing," Hariri said.
Lebanon's cabinet is supposed to reflect both the parliamentary representation of Lebanon's main parties and its major religious sects.
Rival parties have jostled over how many cabinet positions each faction should get in the new national unity government, and over the most important jobs.
Hezbollah leader Sayyed Hassan Nasrallah insisted on Saturday that one of its Sunni allies be given a portfolio in the new cabinet. He indicated Hezbollah would be ready to go back to square one in negotiating a government if necessary.
In his first public statement since Nasrallah's speech, Hariri said there could be no solution to the impasse as things stood and reiterated that he would not accept Hezbollah's demand regarding the cabinet portfolio.
"The government is a national, security and social need ... This mission is for me and President (Michel Aoun). I have done everything I can and everyone has to shoulder his responsibilities," Hariri said, adding that a government plan was ready to go should Hezbollah back down. (Reporting by Laila Bassam, Lisa Barrington and Ellen Francis, Writing by Lisa Barrington and Angus McDowall Editing by Mark Heinrich)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)