(Adds Capriles quote, context on debt)
By Deisy Buitrago
CARACAS, July 14 (Reuters) - Venezuela must refinance its foreign debt to improve government cash flow in the face of recession and soaring inflation, opposition leader Henrique Capriles said on Tuesday, but added a default would have "terrible consequences" for the country.
The OPEC nation is struggling with the shrinking economy and chronic shortages of basic goods following last year's oil market rout, with bond payments taking up a growing portion of available hard currency.
"We must sit down immediately and seek better conditions for debt payment," Capriles told a news conference.
"However, we cannot opt for non-payment, because non-payment has terrible consequences for the republic. We're not talking about default."
Venezuela faces $6.44 billion in debt service between August and December, according to Thomson Reuters data, that is equivalent to about 40 percent of the central bank's international reserves.
The country's economic malaise has boosted investor concerns about a possible debt default, leaving Venezuelan bonds yielding almost 30 percentage points more than comparable U.S. Treasury notes - the highest of any emerging market nation.
Capriles, two-time presidential candidate and governor of Miranda state, said there was no reason for the International Monetary Fund to be involved in a debt refinancing deal.
He said the proposal was part of his own broader plan for economic recovery. It was not immediately evident if either the government or the opposition coalition would back the idea.
Venezuela could save $10 billion through a voluntary refinancing plan, an aide to Capriles said.
Refinancing generally involves negotiating an agreement with creditors to improve the terms of a financing arrangement, while default implies that the borrower unilaterally refuses to make payments or does not do so as scheduled.
Low oil prices together with a sputtering state-led economic model have pushed Venezuela into recession and spurred inflation that is believed to be in triple digits. The central bank this year has not published basic economic indicators.
Polls show that frustration over the economy, particularly with long supermarket lines and constant scrambling for consumer goods ranging from meat to medicine, could lead the ruling Socialist Party to lose the Dec. 6 parliamentary elections.
President Nicolas Maduro dismisses default rumors as part of a right-wing smear campaign and insists the government will meet all debt commitments, noting that the Socialist Party has never missed a bond payment. (Writing by Brian Ellsworth; Editing by Chris Reese and Tom Brown)