According to the report prepared by Canada-based Fraser Institute and unveiled on Monday by Samriddhi Foundation, Nepal fared better than last year's ranking in the economic freedom index which is measured on the basis of five key components -- size of the government, legal system and property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor and business.
"The report measures the economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, and rule of law etc) by analyzing the policies and institutions of 157 countries and territories," read a statement issued by Fraser Institute.
The economic freedom index shows that Nepal received an overall score of 6.56 in 2015. Higher value in the index ranging from 1 to 10 indicates higher level of economic freedom.
The 2015 report is based on the economic data of 2013/14 as it was the most recent data available while preparing the report, according to the institute.
Nepal had ranked 126th with a score of 6.16 out of 152 countries in 2014 economic freedom index of the institute.
Hong Kong topped the chart of countries with a score of 8.97 while Venezuela was at the bottom of the list with a score of 3.23 score.
Among the five components, the score on 'size of government' rose by 1.33 to 8.72 in 2015 compared to 2014.
Likewise, the report shows that there was a marginal improvement of 0.11 score to 4.33 toward the component of legal system and property rights that is measured from various legal and judiciary areas like judicial independence, impartial courts, property rights protection and enforcement of contracts, among others. Access to sound money, freedom to trade internationally and regulation of credit, labor and business inched up 0.02, 0.07 and 0.44 score, respectively, to score 6.42, 6.47 and 6.85 score.
Interestingly, Nepal remained above India, Bangladesh and Pakistan in the economic freedom scale in the list of South Asian countries. Bhutan and Sri Lanka were the most economically free countries in South Asia with scores of 6.86 and 6.57, respectively. India, with a score of 6.43, was just below Nepal in the ranking. Data from the Maldives and Afghanistan were not received for the ranking, according to the report.
However, economists caution that the ranking still shows that the Nepal is in the low level of economic freedom. "Despite the jump in ranking, Nepal's score has improved only marginally, maintaining us as a country with low level of economic freedom," Hemanta Dawadi, senior fellow at Samriddhi Foundation, said.
The improvement in the economic freedom index is also in line with the global improvement. Globally, the average economic freedom score went up slightly to 6.86 this year from 6.84 last year, according to the report.
Meanwhile, Samriddhi Foundation has also released the 'Country Audit Report' alongside the economic freedom index.
'ECONOMIC FREEDOM MUST BE ACCOMPANIED BY STRONG STATE AUTHORITY'
Minister for Finance Ram Sharan Mahat has said that the government should confine to the basic areas where it can perform its work effectively and leave private sector to do the business.
He, however, also emphasized the role of a strong government. "
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"The state has a role. Without the strong government, the market cannot function well and the market reforms cannot be implement"d," he sai". "Economic freedom must be accompanied by a strong state authority. It must ensure a level playing field, fair competition and rule of law, protection of labor's interest and environme"t," Minister Mahat said, speaking at a ceremony held in Kathmandu on Monday to unveil the 'Economic Freedom of the World: 2015 Annual Report'."
"The governments in underdeveloped countries try do many things, but succeed in nothing. The government should focus on areas where it can work effective"y," he added.
Speaking at the program, former governor of Nepal Rastra Bank Yuba Raj Khatiwada said economic freedom alone was not sufficient for prosperit". "Economic freedom gives a necessary condition for prosperity. However, the freedom is not sufficient in itself. For freedom to be a sufficient condition, the need is to increase the capaci"y," Khatiwada said, underlining the state's role in enhancement of such capacity.
He also said economic freedom should not be from the absolute perspective that measures the freedom of only private sector". "The economic freedom should be relative that includes the freedom of all, including the laborers, consumers and entrepreneurs," he added.
Similarly, Senior Economist Bishwambher Pyakuryal said economic freedom offers opportunity to work and invest freely for the benefit of self and the nation. Former finance secretary Rameshore Khanal said that the government should make the budget transparent and exercise the pre-budget discussions for improving the size of government and economic freedom.
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