BEIRUT: The Heritage Foundation 2013 Index of Economic Freedom rated Lebanon at 91st in terms of economic freedoms, out of 177 countries included in this year’s report.
Of the 15 ranked countries in the Middle East and North Africa, seven states improved their scores while seven others lost economic freedom.
The United Arab Emirates and Jordan posted modest gains and advanced into the “mostly free” category. Lebanon and Morocco slid back into the “mostly unfree” group, Heritage Foundation, a Washington D.C.-based think tank, said in a statement.
According to the report, Lebanon’s economic freedom score is 59.5, making its economy the 91st freest in this year’s tally. The report said that its score had decreased by 0.6 point since last year, mostly due to declines in property rights, business freedom and labor freedom.
Also of note in the report is that Lebanon is ranked 10th out of 15 countries in the MENA region, and the country’s overall score is just below the world average.
Nassib Ghobril, chief economist for the Byblos Bank Group, said: “The prevailing lack of political will to implement structural reforms is a direct cause for Lebanon’s slide in economic freedoms both regionally and globally. The price of politicians’ and officials’ complacency and lack of accountability is that Lebanon, which is the oldest free-market economy in the Arab world, ranks currently so low in the region and has slipped into the ‘mostly unfree’ category.
“This is another negative perception of the Lebanese economy and its competitiveness. We should not be surprised at this outcome when the government does not implement reforms, monopolizes entire sectors, and allows the public sector to grow unchecked. This is just one of many global benchmarks where Lebanon’s ranking has slipped recently,” he added.
But not all economists seem to agree with Ghobril. Simon Neaime, an economics professor at the American University of Beirut and director of the Institute of Financial Economics, said he did not agree entirely with the report.
“I believe it is overly pessimistic. I do not agree with the assessment of some of the indices that have been used to asses economic freedom in Lebanon,” Neaime said.
“Relative to other countries in the region, Lebanon, I believe, is doing much better [on economic freedom] than Jordan, for example.”
According to the Heritage report, over the past five years, the Lebanese economy has “registered fragile progress toward greater economic freedom,” adding that “regulatory inefficiency, exacerbated by political volatility, curbs private-sector development. Despite some improvement in streamlining business formation, government bureaucracy and the lack of transparency create a poor entrepreneurial climate.”
For the Heritage analyst it is critical that Lebanon makes deeper institutional reforms to improve the foundations of economic freedom, which will in turn improve the country’s prospects for long-term economic development and increased poverty reduction.
Touching on well-known problems, Heritage noted that the Lebanese economy “has been severely disrupted since 1975 by Civil War and Syrian occupation.”
Continuing security problems also considerably hamper the economy, with the report adding that “political uncertainty at home” and the ongoing bloody civil war in neighboring Syria have slowed recovery significantly.
Among top criticisms were on the rule of law, with the report noting that the Lebanese judiciary is weak and vulnerable to political interference.
“The government-appointed prosecuting magistrate exerts considerable influence on judges. Trials, particularly of commercial cases, drag on for years. Lebanese law provides for some protection of intellectual property rights, but piracy remains a significant problem. Rampant corruption is aggravated by sectarian ruptures that are exacerbated by conflict in neighboring Syria.”