By Brian Ellsworth and Deisy Buitrago
CARACAS (Reuters) - Venezuela expects to provide local businesses with between $5.5 billion and $7 billion this year via a new floating foreign exchange system, the vice president for economy said on Thursday, adding the country is seeking voluntary debt renegotiating to improve cash flow.
The government on Wednesday unveiled a new currency exchange system that will provide U.S. dollars at 10 bolivars for priority goods such as food and medicine and also at a floating rate known as Dicom that opened at 215 bolivars for other goods.
"This is a system that recognizes the market," said Miguel Perez, former head of the country's small- and medium-sized industry association who serves as both economy vice president and industry minister, in an interview with Reuters.
"It is designed to meet social needs, but also to meet the needs of the real economy."
The system will involve the sale of bonds, he added, without offering details.
State oil company PDVSA, which brings in the lion's share of the OPEC country's hard currency, does not have fixed percentages for how much will be sold at each rate.
The Dicom system is the fourth currency exchange platform that Venezuela has created since 2013 with the intention of providing a floating exchange rate.
The first three never actually floated, and were ultimately shut down amid complaints they did not provide steady access to hard currency and were not sufficiently transparent.
Critics have for years complained that exchange controls leave businesses struggling to obtain hard currency for imports and have fueled corruption by allowing the well-connected to buy dollars on the cheap and resell them for a large profit.
On the black market, U.S. dollars fetch more than 1,100 bolivars.
The government of President Nicolas Maduro says the country's economic troubles, including chronic product shortages and runaway inflation, are the result of an "economic war" waged by political adversaries.
VOLUNTARY DEBT RENEGOTIATION
The combination of weak oil markets and a heavy debt payment schedule for this year has led Venezuela to seek better financing conditions from China which is the country's top financier through a $50 billion oil-for-loans agreement.
"They took a proposal, I cannot reveal it today," said Perez, referring to a Venezuelan delegation recently in Beijing. "When you have a creditor and partner, you seek to improve the conditions of the relationship."
Venezuela paid off its $1.5 billion 2016 sovereign bond that matured in February, but state oil company PDVSA still faces more than $3 billion in bond maturities later this year. Authorities are seeking ways to improve the country's cash-flow situation, but are not considering restructuring.
"What we're saying is that we cannot rule out any voluntary financial tool that allows us to improve the country's financial conditions," Perez said. "We cannot talk about restructuring."
Venezuela's bonds are the highest-yielding of any emerging market security, according to JPMorgan's Emerging Market Bond Index, primarily due to investor concerns the country could default as a result of its cash-flow problems. Maduro assures the country will meet its commitments and attributes market worries to politically motivated rumor mongering.
Perez noted with irony that the very funds managers and investment bankers who describe doom and gloom scenarios are constantly offering financial services to the government.
"These same people are showing up in Venezuela nearly every week to say 'we can resolve this, we can do that," he said, declining to name firms that have made such proposals.
"It seems, I don't know, like a double discourse."
Perez said he hopes Venezuela will eventually move toward a single exchange rate once the economy stabilizes and the government can ensure the poor have sufficient social protection.
"Once we have a system of subsidies that guarantees the protection of the vulnerable through direct subsidies, I think we would be in conditions to move toward a single exchange rate," he said, without offering a time frame.