Lithuania is ranked ahead of Baltic neighbour Latvia at 36th and Poland in 39th place but is behind Estonia in 9th place.
“Lithuania has implemented critical reforms in many areas, gradually expanding its vibrant private sector. Business start-up procedures have been streamlined, and a relatively efficient tax regime facilitates entrepreneurial growth. Amendments to labour regulations, intended to enhance labour market flexibility, came into force in July 2015,” said the Heritage Foundation report.
Hong Kong tops the global rankings, with Singapore in second, and New Zealand, Switzerland, and Australia completing the top five. 186 countries around the world are assessed across a range of metrics including property rights, freedom from corruption, government spending, labour and business regulation and openness of markets to trade.
Lithuania is ranked sixth in Europe for economic freedom.
Lithuania does well under a number of measures globally, including financial freedom (3rd), trade freedom (10th) and fiscal freedom (17th) but ranks poorly on government spending (107th) and labour freedom (96th).
The Heritage Foundation said: “Business formation and operation are possible without bureaucratic interference, and no minimum capital is required. Despite some reform, relatively stringent employment protections perpetuate labour market rigidity. Adoption of the euro in January 2015 reduced systemic risks relating to euro-denominated debt,” said the report.
Lithuania was ranked 40th in the world for freedom from corruption and 39th in the world for property rights.
“Corruption remains an issue in Lithuania, but progress is apparent. In 2014, the new president announced that she would not approve ministers whose deputies were included on a so-called blacklist created by the Secret Investigation Service that named eight vice-ministers who allegedly were involved in corruption cases. Judicial independence has been strengthened by membership in the EU,” the report said.
The Heritage Foundation said that continuing fiscal consolidation and better management of public finances would be critical to managing inflation and ensuring economic resilience.