Heritage Foundation recently published the full report (after having released the executive summary last week) of its 32^nd edition of the Index of Economic Freedom in which it assessed economic freedom in 176 countries in the year 2025. 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.

As highlighted last week, Lebanon scored 43.1 in the 2026 IEF, compared to a score of 44.1 in 2025 and a world average of 59.9, losing 1 position from its 2025 rank to occupy as such the 166^th place in the world and the 12^th in the MENA region with its economic freedom being categorized as “Repressed” for the fifth consecutive year. The breakdown of Lebanon’s performance (now available in the full report) shows an annual drop in six freedom criteria namely property rights, government integrity, fiscal health, government spending, business freedom and labor freedom while only two indicators (judicial effectiveness and trade freedom) witnessed an annual improvement and the results of the remaining four indicators remaining flat y-o-y. The report noted that the foundations of Lebanon’s economic freedom have weakened over the last couple of years, with the entrepreneurial environment, characterized by political instability and regulatory inefficiency, hampering the growth of private investment. Furthermore, the report revealed that the highest personal income tax rate in Lebanon stood at 25% in 2025 while the corporate income tax rate was 17%, with the tax burden representing 7.3% of GDP, with government spending and budget deficit averaging 14.9% and -3.2% of GDP over the last three years.

Finally, it is worth highlighting that the largest annual drop in Lebanon’s performance was recorded in the labor freedom indicator which shed 8.7 points to 48.4. It is worth noting, in this regard, that as per Heritage Foundation global government labor law regulations (minimum wages, limits on working hours, restrictions on hiring and firing, etc.) in general penalize both businesses and workers by preventing employers and employees from freely negotiating changes in terms and conditions of work.