The Heritage Foundation's Index of Economic Freedom for 2019, a broad indicator of economic freedom in 180 countries, ranked Lebanon in 154th place worldwide and in 12th place among 15 Arab countries that have a full dataset. Lebanon came in 41st place among 49 upper middle-income countries (UMICs) included in the survey. Lebanon ranked in 140th place globally and in 12th place among Arab countries in 2018, while it ranked in 137th place globally and in 11th place in the Arab world on the 2017 index. 

The index evaluates individual economies on the basis of 12 equally-weighted broad factors of economic freedom divided into four pillars that are the rule of law, government size, regulatory efficiency and market openness. A country's score ranges between zero and 100, with 100 reflecting the most free economy. 

Globally, Lebanon has a higher level of economic freedom than Iran, Angola and the Democratic Republic of the Congo, and a lower level than Brazil, Niger and Afghanistan among economies with a GDP of $10bn or more. It also has a higher level of economic freedom than Iran, Turkmenistan, Ecuador, Algeria, Equatorial Guinea, Cuba and Venezuela among UMICs. 

Lebanon's level of economic freedom reached 51.1% in the 2019 survey relative to 53.2% in 2018 and 53.3% in the 2017 survey. Lebanon's 2019 score was below the global level of economic freedom of 60.8%, the UMICs' level of 59.7% and the Arab level of economic freedom of 58.9%. The survey maintained Lebanon's economic freedom status in the "mostly unfree" category for the seventh consecutive year. Lebanon was downgraded in the 2013 survey from the "moderately free" category.

The survey indicated that the decrease in Lebanon's overall economic freedom score was due to a weaker performance on the judicial effectiveness, trade freedom and investment freedom indicators, despite the modest improvement in the labor freedom indicator.

Bank of America Merrill Lynch (BofAML) indicated that the formation of the new government helps authorities restore domestic confidence and provides an opportunity to address macroeconomic imbalances in Lebanon. It considered that the new government will implement some fiscal reforms. But it said that the economy needs deeper reforms and a pick-up in deposit growth to safeguard medium-term financial and economic stability, given the challenging macroeconomic fundamentals of the country.    

BofAML considered that the Cabinet's formation is important, as it will end policy paralysis and will help unlock donor funding that requires institutional continuity, amid the urgent need to implement reforms. It pointed out that the government's priorities will be to accelerate the needed economic reforms. It said that authorities are likely to aim to pass the 2019 Budget during the coming few weeks, but it noted that the budget is unlikely to incorporate significant fiscal reforms. It added that a second licensing round for offshore oil & gas exploration and production in Lebanon is due to be launched in early 2019. Further, it considered that the government could aim to formulate and approve a broad economic reform plan over the next several months at the earliest. It noted that some fiscal reforms, such as reintroducing taxes on petroleum products, raising the value-added tax rate and increasing electricity tariffs, are not currently backed by a political consensus. It said that, once the reform plan is finalized, the government could then submit it to donors with the aim to unlock CEDRE funds for the first phase of the Capital Investment Program. It noted that the largest projects in this phase are import-intensive, which could limit net capital inflows. 

Further, it indicated that the new government comes with a mandate to address Lebanon's urgent economic challenges. It anticipated that approving an economic plan to narrow the fiscal deficit, estimated at about 10% of GDP in 2018, will be the government's top priority. It expected the government to quickly approve the economic reform plan, given that a draft plan is ready. Also, it said that the passage of these reforms is unlikely to face opposition in Parliament due to the broad representation of political parties in the Cabinet. It noted that the economic plan would include fiscal measures to narrow the fiscal deficit by 1% of GDP annually over the next five years through spending restraint and electricity tariff hikes, among others.  

Banque du Liban (BdL) issued Intermediate Circular 515 on January 30, 2019 that amends Basic Circular 23 issued on March 7, 1996 about the facilities that BdL can provide to commercial banks and financial institutions. The circular details BdL's stimulus package for 2019 that subsidizes interest rates on loans to several sectors. The new economic stimulus package represents BdL's eighth consecutive package since 2013.

The circular stipulates that BdL will provide interest rate subsidies on LBP790bn in housing loans, on LBP45bn in loans to higher education, on LBP25bn in micro credits, and on LBP5bn in loans through the Kafalat Corporation. Also, BdL will subsidize a total of $500m to finance mortgages for Lebanese expatriates, as well as environmentally-friendly projects, research & development projects, and the knowledge economy, among other sectors. 

The circular indicated that LBP300bn in new mortgages will benefit from the subsidies. According to the circular, commercial banks that plan to extend subsidized mortgages have to exchange US dollars for Lebanese pounds from BdL and place them in a special account at BdL in order to utilize them to extend such loans. It stipulated that BdL will exclude housing loans under this mechanism from the calculation of the 25% ceiling that it previously imposed on the banks' loans-to-deposits ratio in Lebanese pounds. The circular added that the remaining LBP490bn in housing loans constitute the amount of loans that commercial banks extended and subsidized from their own funds in 2018, as per the agreement between BdL and commercial banks. At the time, BdL indicated that it will cover the interest subsidies starting from 2019, while banks will bear the cost of the subsidies in 2018. 

Under the current stimulus package, lending rates across most loan categories will increase compared to the previous packages. Specifically, the interest rate on the incentive housing loan increased from 4.75% to at least 5.94%, while the rate on housing loans approved by the Public Corporation for Housing rose from 3.78% to at least 5.5%. Also, the subsidized interest rate on housing loans under different protocols signed between banks and public institutions increased from 2.628% to at least 5.5% currently, while the interest rates on mortgages extended by Banque de l'Habitat was unchanged at 3.75%. Further, the circular indicated that an increase in the cost of funds would not lead to a rise in the subsidies provided by BdL, which means that loan beneficiaries will bear the difference. In contrast, a decrease in the cost of fund would lead to a drop in BdL subsidies, which means that the interest rate on the loan would not change.