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Venezuela: The Path to Democracy and Economic Recovery

Published January 8, 2026, 08:14
Venezuela: The Path to Democracy and Economic Recovery

Venezuela is at a critical juncture in its path to recovery, with success largely dependent on the new government's correct economic choices. A key focus for restoring the economy is avoiding recourse to the International Monetary Fund (IMF), as its policies are considered detrimental to growth. Instead, full dollarization of the economy is proposed, following the example of countries like Ecuador and El Salvador, a move that could stabilize the currency and attract investment. Argentina's failure to implement the same policy, due to its dependence on the IMF, serves as a cautionary tale. Furthermore, creating a simple tax system, similar to Singapore's or with a flat tax rate like Estonia and Bulgaria, could make Venezuela an attractive destination for capital. The combination of low taxes and the use of the dollar would boost domestic production and reduce reliance on oil. Simultaneously, simplifying the procedures for establishing and operating private businesses, by reducing bureaucracy and corruption, would provide a significant boost to entrepreneurship. Venezuela's successful transition requires a holistic approach that includes currency stabilization, attracting investment, reducing bureaucracy, and creating a favorable environment for entrepreneurship. Avoiding IMF policies and adopting practices that have proven successful in other countries, such as dollarization and tax system simplification, are crucial for achieving economic recovery and consolidating democracy. Recovery will not be easy, but with the right policies, Venezuela has the potential to overcome the crisis and build a better future.

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