Libya has ranked 174th out of 176 countries in the 2026 Index of Economic Freedom, highlighting deep structural challenges in its economy and governance, according to a report by the Heritage Foundation.
The report classified Libya as a “repressed economy”, with its score falling sharply to 31.3 out of 100, down from 39.9 in the previous year. This decline places Libya at the bottom of the Middle East and North Africa region.
Analysts attributed the drop to weak rule of law and ongoing political and legislative instability. These factors have negatively affected property rights and government integrity, limiting investor confidence and economic activity.
The report also pointed to rising inflationary pressures. Inflation has exceeded 56 percent, placing Libya among the highest globally in terms of price increases. This has eroded purchasing power and increased the financial burden on households.
Institutional divisions, particularly in the management of the central bank and the financial system, were cited as key obstacles. The public sector continues to dominate the economy, while private sector activity remains limited outside extractive industries.
In contrast, other countries in the region have shown improvement. Oman climbed 19 places to rank 39th, while Singapore retained the top global position with a score of 84.4.
The findings reflect Libya’s broader economic difficulties. Political division and weak institutions have slowed reform efforts and complicated economic planning across the country.
For citizens, the impact is clear. Rising prices and limited job opportunities have increased pressure on living standards, while economic uncertainty continues to affect daily life.
Experts say improving Libya’s economic performance will require political stability and stronger institutions. Structural reforms in the financial sector and business environment are also essential to attract both domestic and foreign investment.
Without such changes, Libya risks remaining among the world’s weakest-performing economies, with limited prospects for sustainable growth.
