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Venezuela to repay US$2b of debt to local importers

Venezuela announced it would repay a small part its debt to local importers, after currency controls have sparked mass shortages of basic goods in the oil-rich country.

CARACAS: Venezuela announced on Friday it would repay a small part its debt to local importers, after currency controls have sparked mass shortages of basic goods in the oil-rich country.

The government said it will disburse roughly US$2 billion - significantly less than the US$14 billion the disgruntled private sector firms say they are owed in hard currency and need to pay their parent companies or foreign suppliers.

The debt stems from Venezuela's strict exchange rate controls, which require companies to sell products in bolivars, the national currency, on the government promise to reimburse them in dollars.

Rafael Ramirez, vice president for economic affairs, said US$1.188 billion would be paid out next week to 939 small and medium-sized companies from "priority" sectors.

An additional US$900 million will be allocated to large companies from various sectors, including US$486 million for airlines, he told reporters.

With the controls in place since 2003, Venezuela is only providing US dollars at the official rate of 6.3 bolivars to importers of designated priority goods such as food and medical supplies.

Others who need dollars have to buy them at a higher rate of 10 to 50 bolivars. On the black market, the greenback can cost as much as 60 bolivars.

Venezuela, an OPEC nation that sits atop the world's largest proven oil reserves and imports most of what is consumes, is struggling with shortages of goods as basic as toilet paper.

In addition to high inflation and soaring crime, the shortages have fueled at times violent anti-government protests that have killed at least 42 people since February, with opposing sides trading blame for the bloodshed.

Since President Nicolas Maduro took power last year following the death of his mentor, longtime socialist leader Hugo Chavez, Venezuela has seen its economic situation deteriorate.

On Thursday, Venezuelan authorities met with international airlines, to which it owes more than US$4 billion, after many cut back or halted service.

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