Mozambique must restructure debt and negotiate with the IMF at the same time - Consultant
With the exception of Guinea-Bissau, which rose 26 positions to 119th place in a ranking of about 180 economies analysed, all Portuguese-speaking countries slid downwards in the 2017 Economic Freedom Index.
This year’s ranking establishes the following hierarchy in the Portuguese-speaking world: Cape Verde (116th), Guinea-Bissau (119th), Sao Tome and Principe (124th), Brazil (140th), Mozambique (158th), Angola (165th) and East Timor (173rd).
Portugal dropped 13 places to 77th place.
Macao, where Portuguese is one of the official languages, along with Chinese, achieved the best ranking among Portuguese-speaking territories at 32nd, an improvement over its 37th place in 2016. Macao has an assessment of 70.7 in the degree of economic freedom, better than the world average of 60.9 points.
The Index of Economic Freedom classifies countries in five categories: “free” (80 to 100 points), “mostly free” (70 to 79.9), “moderately free” (60 to 69.9), “mostly unfree” (50 to 59.9) and “repressed” (40 to 49.9).
Most Portuguese-speaking countries – Cape Verde, Guinea Bissau, Sao Tome and Principe and Brazil – are classified “mostly unfree”, while Mozambique, Angola and Timor-Leste are listed as “repressed.”
Despite Guinea-Bissau’s rise in the ranking from 145th (2016) to 119th position, the Economic Freedom Index 2017 states that “limited attempts at structural reform have led to unbalanced progress in economic development”, and says the dynamism of the private sector remains constrained.
Cape Verde – with 56.9 points, 9.6 lower than in 2016 – registered the biggest decline among Portuguese-speaking countries, slipping from 57th to 116th place in the classification.
“Cape Verde has benefited from the maintenance of moderate monetary stability and a relatively high market opening that has facilitated external trade and investment,” says the report, which also notes the benefits to the economy of a “sound and transparent legal framework”.
However, “Cape Verde’s institutional strong points, including judicial independence and government transparency, are not accompanied by a commitment to sound management of public finances,” the report qualifies.
“With public debt reaching 100 percent or more of GDP, reducing the chronic deficit needs to be the priority” in Cape Verde, it adds.
Brazil has fallen from 122nd position (2016) to 140th. “The political crisis, coupled with declining prices, has contributed to a strong contraction in the economy that has affected consumer and investor confidence,” the Heritage Foundation report says.
It adds that “the fiscal sector has been seriously compromised” by a combination of factors such as “high inflation, political paralysis and increased budget deficits that have increased the burden of public debt”.
In Mozambique ( a 3.3 drop against last year), the report notes that “reforms to encourage development” have been undertaken, “although progress has been very gradual”, and remarks that “private sector involvement in the economy is substantial, but privatization of state-owned enterprises has slowed down”.
In Angola, “natural wealth has helped attract foreign direct investment and facilitate a decade of remarkable economic growth,” the Economic Freedom Index says. “But the economy has recently suffered a major structural shock as a result of falling oil prices, and oil revenues are uncertain,” the document adds, noting that “monopolies and quasi-monopolies continue to dominate the main sectors”.
With 46.3 points, Timor-Leste maintained its worst ranking among Portuguese-speaking countries (173rd), down six positions compared to last year (167th).
The report points out that, despite “progress in stability since independence in 2002, structural and institutional weaknesses continue to constrain East Timor’s economic freedom” and that “political instability continues to hamper lasting economic development”.
Behind Timor-Leste come only Equatorial Guinea (174th), Zimbabwe (175th), Eritrea (176th), Republic of Congo (177th), Cuba (178th), Venezuela (179th) and North Korea (180th).
The 2017 Economic Freedom Index places Hong Kong, Singapore and New Zealand in the top positions, as last year.
The study, which covers 186 economies but excludes six countries due to lack of data, analyzes ten variables in four groups: rule of law, government size, efficiency at the level of regulation and creation of new businesses.Source: Lusa