Mustapha Adib’s announcement deals a blow to French president Emmanuel Macron’s efforts to break a dangerous political stalemate in the crisis-hit country.
The French leader has been pressing Lebanese politicians to form a cabinet made up of independent specialists who can work on enacting urgent reforms to extract Lebanon from a devastating economic and financial crisis, worsened by the explosion on August 4 in the capital Beirut.
However, efforts by the French-supported Mr Adib have hit multiple snags, after the country’s main Shia groups, Hezbollah and Amal, insisted on retaining hold of the key finance ministry.
Their insistence emerged after the US administration slapped sanctions on two senior politicians close to Hezbollah, including the former finance minister.
The two groups also insisted on naming the Shia ministers in the new cabinet and objected to the manner in which Mr Adib was forming the government, without consulting with them.
After a short meeting with Lebanese president Michel Aoun on Saturday, Mr Adib said he was stepping down because the kind of cabinet that he wanted to form “was bound to fail”, and he is keen on protecting national unity.
Lebanon, a former French protectorate, is mired in the country’s worst economic and financial crisis in its modern history.
It defaulted on paying back its debt for the first time ever in March, and the local currency has collapsed, leading to hyperinflation and soaring poverty and unemployment.
The crisis has been worsened by the colossal explosion at Beirut’s port caused by the detonation of thousands of tonnes of ammonium nitrates.
The blast killed nearly 200 people, injured thousands more and caused losses worth billions of dollars.
The country is in desperate need of financial assistance but France and other international powers have refused to provide aid before serious reforms are made.
The crisis is largely blamed on decades of systematic corruption and mismanagement by Lebanon’s ruling class.
The French leader has described his initiative, which includes a road map and a timetable for reforms, as “the last chance for this system”.
Mr Adib’s resignation comes a few days after Mr Aoun himself bluntly told reporters that Lebanon would be going to “hell” if a new government is not formed soon.
In a televised address, he criticised his political allies, Hezbollah and Amal, for insisting on holding on to the finance portfolio in any new government, but also criticized Mr Adib for attempting to form a government and impose names for cabinet positions without consulting with the parliamentary blocs.