BEIRUT- Lebanon's central bank chief said on Thursday the monetary situation in the country is stable and he hopes the formation of a government soon will strengthen confidence in the economy.

Almost five months after national elections, a political stalemate is preventing Lebanon from forming a national unity government, raising concerns for the heavily-indebted economy.

"Strengthening confidence to help the economy is important. I hope this will happen after the formation of the government soon," Central Bank Governor Riad Salameh said in televised comments after a meeting with the government's social and economic council.

Lebanon had the world's third-highest debt-to-GDP ratio, at over 150 percent, at the end of 2017. The International Monetary Fund wants to see an immediate and substantial fiscal adjustment to improve debt sustainability.

The ongoing failure of politicians to form a government needed to undertake the necessary reforms following the parliamentary election in May has compounded concern for the economy and currency, which is pegged to the U.S. dollar. 

"The formation of a government, firstly, gives a vision of where the country is going economically and financially. Secondly, it reassures those who fund Lebanon that there is continuity and an ongoing ability for issuances to fund the country's deficit," Salameh said.

(Reporting by Lisa Barrington Editing by Mark Heinrich) ((lisa.barrington@thomsonreuters.com; +961(0)1954456;))