Corruption increasing in region, global index indicates
"This year, more countries declined in the index than improved, showing the need for urgent action," the report said.
Lebanon scored 28 points on the index, falling from 123rd place in 2015 to 136th in 2016.
Iraq, Libya, Sudan, Somalia and Syria, meanwhile, were named among the 10 most corrupt countries in the world.
Israel, whose prime minister Binyamin Netanyahu is at the centre of an ongoing graft probe, ranked 28th on the index.
TI said that lower-ranked countries like Lebanon are still "plagued by untrustworthy and badly functioning public institutions like the police and judiciary". It added that "even where anti-corruption laws are on the books, in practice they're often skirted or ignored".
Around 70 percent on the 176 nations listed on the index received a score below 50 on the 100-point scale, with zero indicating the highest level of corruption.
Receiving more favourable marks were Denmark and New Zealand – who were named as the least-corrupt countries – followed by Finland, Sweden, Switzerland and Norway.
According to the corruption monitoring watchdog, perceived levels of corruption and rising social inequality last year made the perfect climate for populist politicians to take advantage of the situation.
TI said that US President Donald Trump and French far-right presidential candidate Marine Le Pen frequently linked the marginalisation of working people to a "corrupt elite" who were to blame for social and economic woes.
The watchdog expressed scepticism, however, that such anti-establishment rhetoric will actually translate into effective anti-corruption measures.
"Instead of tackling crony capitalism, those leaders usually install even worse forms of corrupt systems," it said.
In order to rank countries on the index, TI's panel of experts consider the prevalence of bribery in a country, whether government officials are held to account and whether public bodies respond to the needs of citizens.
Editor's note: An earlier version of this article incorrectly suggested corruption had fallen in Lebanon. The error has been corrected.