2015 Index of Economic Freedom


overall scoreN/A
world rank
Rule of Law

Property Rights10.0

Freedom From Corruption15.0

Limited Government

Government Spending37.5

Fiscal Freedom95.0

Regulatory Efficiency

Business Freedom46.8

Labor Freedom66.7

Monetary Freedom71.4

Open Markets

Trade Freedom80.0

Investment Freedom5.0

Financial FreedomN/A

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Quick Facts
  • Population:
    • 6.1 million
  • GDP (PPP):
    • $70.4 billion
    • -9.4% growth
    • -6.0% 5-year compound annual growth
    • $11,498 per capita
  • Unemployment:
    • 9.0%
  • Inflation (CPI):
    • 2.6%
  • FDI Inflow:
    • $702.0 million
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Numerical grading of Libya’s overall economic freedom remains suspended for the third year in a row in the 2015 Index because ongoing political turmoil has resulted in deterioration in the quality of publicly available economic statistics. Facets of economic freedom for which data are still available have been individually scored. As a “repressed” economy with a score of 35.9, Libya was ranked last in the Middle East/North Africa region when it was last graded in the 2012 Index.

Political unrest, violence, and militia rule have continued to plague Libya ever since Muammar Qadhafi’s ouster in 2011. Years of dictatorial rule left the economy largely dependent on oil resources. Structural and institutional mechanisms to guarantee sustained growth have been absent. Limited efforts to diversify the economy away from oil have been unsuccessful.

Libya faces serious long-term and short-term challenges. In the short term, a political transition must be achieved that limits violence and political instability. Establishing the rule of law and effective governance will be critical if the weak central government is to repair the crumbling economic infrastructure destroyed during the civil war.



Dictator Muammar Qadhafi was overthrown in 2011, and elections were held in July 2012. The new government under President Mohammed Magarief and Prime Minister Ali Zeidan struggled to rein in militias fighting for control of territory and resources. Zeidan stepped down in March 2014 and was replaced by Ahmed Maiteg in May. As fighting between militias and Islamist terrorist groups continued, Libya held legislative elections in June. Oil and natural gas provide about 80 percent of GDP, 95 percent of export revenues, and 99 percent of government revenues. Economic recovery began in 2012, and the energy sector is producing at pre-war levels. The government faces major challenges in disarming and demobilizing militias, improving the rule of law, and reforming the state-dominated socialist economy.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 15.0 Create a Graph using this measurement

Institutional effectiveness continues to be undermined by security problems. Many experienced technocrats who served under the Qadhafi regime are blocked from assuming leadership roles in which they might be able to execute effective policy. In 2014, numerous investigations of foreign companies allegedly complicit in improper business practices in Libya under the Gaddafi regime continued.

Limited GovernmentView Methodology

Libya’s top individual income tax rate is 10 percent, and its corporate tax rate is 20 percent (plus a 4 percent surcharge for a Jihad Fund). Oil revenue makes up 96 percent of all government revenue, and security concerns make tax administration erratic. Overall tax revenue amounts to less than one percent of gross domestic product, and expenditures equal 45.7 percent of GDP.

Regulatory EfficiencyView Methodology

The business environment, lacking transparency and efficiency, remains very poor and fragile. The labor market, which already suffered from state interference and control, has been severely affected by political instability and uncertainty. In the 2014 budget, the government committed to subsidy reform by January 2015, starting with the conversion of goods and fuel subsidies into cash subsidies.

Open MarketsView Methodology

Libya has a 0 percent average tariff rate. The country’s regulatory regime interferes with trade. State-owned enterprises distort the economy, and political unrest discourages international trade and investment. The financial sector has many shortcomings in its diversification and scope. The central bank owns four of the major banks that dominate the banking sector.

Country's Score Over Time

Bar Graph of Libya Economic Freedom Scores Over a Time Period

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Regional Ranking

rank country overall change
2United Arab Emirates72.41.0
8Saudi Arabia62.1-0.1

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