PORT LOUIS:Nepal has scored 52.7, making its economy 130th among 188 nations in economic freedom, according to the 2010 Index published by Heritage Foundation and Wall Street Journal.

"Its score is 0.5 point lower than last year, reflecting declines in five of 10 economic freedoms due to political instability," said the report. Nepal ranked 28th among 41 countries in the Asia Pacific region, and its score is below world and regional averages.

It falls in 'mostly un-free' category according to its score. Countries that score from 50 to 59.9 are in mostly un-free category while those scoring 60 to 69.9 are moderately free, 70 to 79.9 mostly free and 80 to 100 are freest economies. Those scoring 0 to 49.9 are repressed. Seven countries fall in freest category, 23 in mostly free, 43 in moderately free, 55 in mostly un-free and 36 countries in repressed economies.

"Nepal's economy is marked by rapid population growth and inadequate economic growth that have led to widespread chronic poverty," the report said. "Weak reform efforts have failed to stimulate broad-based economic growth," it added.

The report hails the state's bid to boost private sector development but says political instability has weakened the country's ability to implement economic reform or create a stable environment for development..

Although reforms in Nepal's trade regime are slowly having an effect, the average tariff rate remains high, according to the report. "Foreign investments must be approved or face licensing requirements. Lack of transparency, corruption, and a burdensome approval process impede much-needed private investment growth. Property rights are undermined by the inefficient judicial system, which is subject to substantial corruption and political influence." The report measures 10 components of economic freedom and their scores are averaged to give an overall economic freedom score for each country.

This time, the UK, the US and China rankings fell while Poland, Turkey and Mexico rankings improved significantly. Hong Kong remains the world's freest economy, followed by Singapore, Australia, New Zealand and Ireland.

Regionally, in Asia-Pacific region, Nepal ranks 28 out of 41 economies. But in South Asia, Nepal is behind all countries except Bangladesh.