Lebanon has pursued relatively liberal economic policies since independence, though it continues to rank moderately in global indexes of economic freedom due to issues like perceived corruption and regulatory restrictions. Among Middle Eastern and North African countries, Lebanon typically ranks in the top three or four in terms of economic freedom. Recent reforms in Lebanon have aimed to gradually reduce customs duties and modernize tax procedures, introduce new laws on competition, property rights, and procurement, and sign free trade agreements. However, political impasses have delayed some economic reforms.

1. Recent Economic Reforms in Lebanon:
Economic Freedom & Governance
5th Economic Freedom of the Arab World Conference
Cairo, November 1-2, 2010
Dr. Mounir Rached- Vice President
Mr. Mario Nassar- Project Coordinator
1

2. Contents
I. Global ranking
II. Relative ranking in MENA
III. Prominent features of the Lebanese economy
IV. Recent achievements
2

3. I.Global ranking
Lebanon has espoused liberal economic policies since
independence
The public sector remained engaged in few functions
in education only 15% 0f schools are public
The state has limited interference in economic activity
Plays the role of regulator (?)
3

4. Global cont
 Lebanon, however, continues to have a relatively low
ranking in the global economic freedom index
 77th globally
4

5. Global cont
Its rating is burdened by few important components
Corruption is perceived to be high-one of the highest
among peers. 102nd out of 179
Corruption is well entrenched
5

6. Global cont
 Property rights (enforcement of contracts) score is low
Its legal system is perceived to be politically
manipulated
 Investment freedom score is low
Restricted licensing- cumbersome administrative
procedures- multiple phases-
Ceilings on certain investments
No restriction ,however, on capital flows-private &
enterprises
6

7. II.Relative ranking in MENA
7
7.2
7.4
7.6
7.8
8
8.2
2002 2003 2004 2005 2006 2007 2008
FinalGrade
Top Economic Freedom Achievers
in the Arab World
(Fraser Institute)
Bahrain
Jordan
Kuwait
Lebanon
Oman
Qatar
7

8. Index of Economic Freedom
 The index adopted by Fraser Institute Foundation
relies on Five areas:
 Size of Government
 Commercial & Economic Law and Security of Property
Rights
 Access to Sound Money
 Freedom to Trade Internationally
 Regulation of Credit, Labor and Business
8

9. Lebanon- Economic freedom index
Lebanon’s Ranking in MENA (Fraser Institute):
 Year 2002 : Rank 4
 Year 2003 : Rank 4
 Year 2004 : Rank 5
 Year 2005 : Rank 4
 Year 2006 : Rank 4
 Year 2007 : Rank 3
 Year 2008 : Rank 3
9

10. Size of Government- Lebanon
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2008
Grades
Year
General government
consumption spending as
a percentage of total
consumption
Transfers and subsidies as
a percentage of GDP
Government enterprises
and investment
Top marginal tax rate
Rank in the Arab World (2008): 1

11. Commercial and Economic Law and
Security of Property Rights- Lebanon
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2008
Grades
Year
Military interference in rule
of law and the political
process
Integrity of the legal
system
Regulatory restrictions on
the sale of real property
Legal enforcement of
contracts
Rank in the AW (2008): 15

12. Access to Sound Money-Lebanon
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2008
Grades
Year
Money growth
Standard deviation of
inflation
Inflation: Most recent year
Freedom to own foreign
currency bank accounts
Rank in the AW (2008): 3

13. Freedom to Trade Internationally
Lebanon
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2008
Grades
Year
Taxes on international
trade
Black-market exchange
rates
Capital controls
Rank in the AW (2008): 11

14. Regulation of Credit, Labor & Business
Lebanon
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2008
Grades
Year
Credit Market Regulations
Labour Market Regulations
Business Regulations
Rank in the AW (2008): 3

15. Lebanon’s Score Over Time
15
2002 2008
Overall Score 7.8 7.6
Size of Government 8.7 8.4 Subsidy score
Commercial & Economic
Law & Security of
Property Rights
6.1 6.1
Access to Sound Money 9.6 8.8 inflation score
Freedom to Trade
Internationally
7.3 6.8 capital controls
score
Credit, Labor, and
Business
7.2 8.0 labor market
improved

16. III. Prominent Features of Lebanese
economy
 Lebanon is by far the best performer in the size of
government rating compared to the Arab World
16

17. (Cont.)
2007
1. Gov Consumption /Total consumption = 13.82%
Arab World’s Average = 24%
Transfers & Subsidies/GDP = 7.1%
Arab World’s Average = 7.84%
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18. (Cont.)
2. Taxes relatively low
Tax Revenue/ GDP = 14.8%
Income Tax Rate = 20%
World Average = 29.26%
Top Corporate Tax Rate = 15%
World Average = 25.1%
VAT =10%
18

19. 19
3. Trade Freedom: one of the highest scores
8.9

20. IV. Recent Achievements
Paris I, II & III and IMF agreement
Ministry of Finance & Ministry of Trade & Economy
 Gradual reduction of customs
 Introduced ASYCUDA to customs clearance
 Introduced VAT
 Developing and modernizing tax procedures
 Restructuring of Tax office
 Automate tax payment
 Promoting transparency and openness to the public
20

21. Achievements
 Introduced competitiveness law
 Introduced new Property rights law-WIPO based
 Introduced new procurement law
 Social security reform initiated
 Privatization remains undecided (how to privatize)
`
21

22. Achievements
 Free Trade Agreements were signed with Lebanon’s major
trading partners; namely:
 The European Union (EU),
 The EFTA States (Switzerland, Lichtenstein, Norway, Iceland) and
 The Gulf Cooperation Countries (GCC); and
 A full establishment of the Greater Arab Free Trade Area
(GAFTA) was achieved in January 2005
 Lebanon is also actively negotiating accession to the World Trade
Organization (WTO)
22

23. Achievements
23
 Recapitalized banks
 Improved supervision
 Political impasses delay reform
END