2017 Index of Economic Freedom

Liberia

overall score49.1
world rank161
Rule of Law

Property Rights33.6

Government Integrity31.4

Judicial Effectiveness41.0

Government Size

Government Spending60.1

Tax Burden83.6

Fiscal Health36.2

Regulatory Efficiency

Business Freedom53.1

Labor Freedom48.5

Monetary Freedom71.8

Open Markets

Trade Freedom60.1

Investment Freedom50.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 4.3 million
  • GDP (PPP):
    • $3.7 billion
    • 0.0% growth
    • 5.0% 5-year compound annual growth
    • $873 per capita
  • Unemployment:
    • 4.2%
  • Inflation (CPI):
    • 7.7%
  • FDI Inflow:
    • $512.3 million
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A reform-minded government has placed Liberia on a path of growth despite numerous challenges. Reforms have dismantled some barriers to trade, simplified business licensing, and eased credit restrictions. In recent years, the government’s core economic policy has focused on promoting broad-based economic growth in the aftermath of the Ebola epidemic and reviving health facilities within a tight fiscal space.

The rule of law is not enforced effectively across the country, and weak property rights and a lack of transparency in the legal system seriously impede private-sector development. Despite reform efforts, systemic corruption increases the cost of business and deters much-needed long-term investment.

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Background

In the early 1990s, civil war killed 250,000 Liberians. A peace agreement was reached in 1995, and rebel leader Charles Taylor was elected president in 1997. He was forced to step down in 2003 and was found guilty of war crimes in 2012. Ellen Johnson Sirleaf, president since 2006, was awarded the Nobel Peace Prize in 2011. The country is fragile, but the U.N. peacekeeping mission authorized in 2003 officially transferred peacekeeping responsibilities to Liberia in July 2016. Liberia is rich in natural resources, including rubber, mineral resources, and iron ore. It was one of the countries hit hardest by the 2014 Ebola outbreak in West Africa.

Rule of LawView Methodology

Property Rights 33.6 Create a Graph using this measurement

Government Integrity 31.4 Create a Graph using this measurement

Judicial Effectiveness 41.0 Create a Graph using this measurement

Property rights are not strongly protected, and the rule of law remains uneven across the country, exacerbated by a precarious physical security environment. The judiciary is weak and inadequately resourced. Overall, the poor functioning of government reflects endemic corruption and a lack of administrative capacity. On the positive side, Liberia was the first African state to comply with the Extractive Industries Transparency Initiative.

Government SizeView Methodology

Liberia’s top individual income and corporate tax rates are 25 percent. Other taxes include a property tax and a goods and services tax. The overall tax burden equals 19.7 percent of total domestic income. Government spending has amounted to 36.5 percent of total output (GDP) over the past three years, and budget deficits have averaged 6.2 percent of GDP. Public debt is equivalent to 40.0 percent of GDP.

Regulatory EfficiencyView Methodology

Despite some legislative efforts to modernize the regulatory framework, private investment and production remain severely hampered by bureaucratic inefficiency. With the labor market not fully developed, a large portion of the workforce is engaged in the informal sector. Following the Ebola crisis, the government increased subsidies for education and health care and received higher levels of subsidized food aid from international donors.

Open MarketsView Methodology

Trade is extremely important to Liberia’s economy; the value of exports and imports taken together equals 112 percent of GDP. The average applied tariff rate is 6.1 percent. Foreign investment in several sectors of the economy is restricted, and foreign investors may not own land. A large part of the population remains outside of the formal banking sector, and the inefficient legal framework deters use of financial institutions.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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