Lebanon's Hariri hopes for new government by end of year

LONDON (Reuters) - Lebanese Prime Minister-designate Saad al-Hariri said on Thursday he hoped a new national unity government would be formed by the end of the year after seven months of wrangling over the allocation of ministerial posts.

Heavily indebted and with a stagnant economy, Lebanon desperately needs a new government to implement economic reforms to put its public finances on a more sustainable footing and unlock foreign aid.

Hariri, who was speaking at Chatham House in London, said negotiations on the formation of the new government were in "the last 100 metres" and that "hopefully we should form it before the end of the year".

"I think the pressure that we have from the economic crisis ... is pushing more and more people to form the government," Hariri said.

Seven months after a general election, Lebanese leaders are still at odds on how to parcel out cabinet positions among rival groups according to a political system that shares out government positions among Christians and Muslim sects.

The final hurdle to a deal has been Sunni representation, with six Sunni lawmakers who are aligned with the Iranian-backed Shi'ite Hezbollah group demanding a cabinet seat to reflect their gains in the election.

Hariri, whose family have long dominated Lebanese Sunni politics, has ruled out giving up one of his cabinet seats for them. President Michel Aoun this week said he had launched a new effort to forge an agreement and that he had to get involved to avoid "catastrophe" - an apparent reference to the economy.

Analysts believe one compromise could be for Aoun to nominate one of the Hezbollah-aligned Sunnis, or a figure acceptable to them, among a group of ministers named by the president.

"I believe that most of the obstacles were resolved. There is still one obstacle and I am sure that we are able to resolve it," Hariri said.

(Writing by Tom Perry; Editing by Kevin Liffey)