Heritage Foundation recently published its 27^th edition of the Index of Economic Freedom, which assesses economic freedom in a total of 184 countries for the year 2020. In detail, the overall index score is calculated based on twelve freedom-related criteria classified under four major categories, and each criterion is graded on a scale of 0 (worst) to 100 (best). The scores of these twelve components of economic freedom, which are calculated based on a number of sub-variables, are equally weighted and averaged to produce an overall economic freedom score for each economy. In this vein, Heritage Foundation commented that the global average economic freedom score remained flat at 61.6 (highest reading ever) for the second year in a row, noting that this score constitutes a 4 point improvement since the inception of the index in 1995. Concurrently, 5 countries emerged as “free” (scores above 80), 33 countries as “mostly free” (scores between 70 and 80), 59 countries as “moderately free” (scores between 60 and 70), 63 as “mostly unfree” (scores between 50 and 60), and 18 as “repressed” economies (scores below 50).

More particularly, Singapore topped the list of covered countries in the 2021 Index of Economic Freedom (IEF) with an overall score of 89.7, followed by New Zealand (score: 83.9) and Australia (score: 82.4). On a regional basis, the United Arab Emirates (UAE) led the list of countries in the Middle East and North Africa (MENA) region in the 2021 IEF, scoring 76.9 and ranking 14^th worldwide. The UAE was followed by Qatar (score: 72.0; global rank: 31) and Bahrain (score: 69.9; global rank: 40), only to name a few.

Locally, Lebanon scored 51.4 in the 2021 IEF, compared to a score of 51.7 recorded in 2020, improving, however, 3 positions to rank as the 154^th freest economy in the world, yet regressing by 1 position on the regional ranking scale to 12^th. Lebanon’s economic freedom was categorized as “Mostly Unfree” for the ninth year in a row. Lebanon was only followed by Algeria (score: 49.7; global rank: 162) and Iran (score: 47.2; global rank: 168) in the MENA region. According to the report, Lebanon saw an improvement in three freedom criteria (namely government integrity, judicial effectiveness, and monetary freedom) which was offset by the weakening scores of six criteria (namely government spending, labor freedom, business freedom, trade freedom, property rights and tax burden). In the same context, the report unveiled that Lebanon’s already weak political institutions have further deteriorated, failing to solve the “deep structural issues” that led to a heavily compromised rule of law. In addition, the report stressed that no improvements in fiscal management have been reported, and that such reforms are a prerequisite to progress in economic freedom. As far as the IEF’s major categories are concerned, and under the “rule of law” pillar, the report uncovered that while the law protects real private property, enforceability remains an issue. The report further underlined the persistent corruption staining government contracts, taxation, and real estate registrations, only to name a few, and that the judiciary system is prone to political pressures. On the “government size” front, the report estimated the country’s total government spending at 31.5% of GDP and its budget deficit at 10.2% of GDP on average during the past three years, while pinpointing a 179.8% debt-to-GDP ratio. In the area of “regulatory efficiency”, the report noted that costs related with starting a business and obtaining a construction permit have increased, while also pointing out to the spiking inflation levels. On the “open markets” front, the report estimated the implied tariff rate at 5.3%, and that Lebanon is not a member of the World Trade Organization at the present.