Russia is looking at borrowing funds on international markets for the first time in a decade, as authorities scramble to combat a deepening economic recession.

The move, revealed on Tuesday by Alexei Kudrin, finance minister, comes as the country seeks ways to plug looming budget deficits and ease the way for heavily indebted companies to raise new funds, The Financial Times reported.

Mr Kudrin said Russia should prepare for budget spending to be cut next year by Rbs1,300bn (?29.3bn) to Rbs9,000bn because of an expected 30 per cent drop in revenue due to low oil prices. The price of oil is barely one-third of what it was when Russia passed its three-year budget last year.

Konstantin Vyshkovsky, a finance ministry official, told reporters on Tuesday that Russia could issue up to $5bn (?3.8bn) in eurobonds with maturities of three to five years next year as part of an effort to help Russian companies – now trying to restructure $420bn of foreign debt – return to international corporate debt markets.

“The important issue here is not so much to receive funds to cover the budget deficit but to create a benchmark for corporate borrowers,” he said.

Russia has not needed to tap international reserves for 10 years as surging oil prices helped it pay down debt and build up vast reserves.

But this year’s budget is set for its first deficit in 10 years – 7.3 per cent of gross domestic product – amid its first recession in a decade.

Russia lost one-third, or $200bn, of its reserves as it battled a run on the rouble at the end of last year. Officials say the remaining $384bn is enough to cover an expected three years of deficits.

However, Mr Kudrin warned on Tuesday that it could take Russia “several years to exit the crisis”, while government forecasts for a drop in GDP of 2.2 per cent this year looked “optimistic”.

The deficits are to be initially funded out of the $121bn “rainy day” fund from windfall oil revenues that forms part of Russia’s $384bn in reserves. But nearly $90bn of that will go towards funding the budget deficit this year. The reserve fund is not likely to cover the budget deficit for 2010, expected to be 5 per cent of GDP, while for 2011 it is set to fall to 3 per cent of GDP.

Bankers and analysts said that investors were likely to welcome a new issue of Russian government debt because it was extremely underleveraged compared with other countries, with only $28.4bn in sovereign debt.

“It is hard to say what things will be like in a year. But for a country of its size, Russia has an extremely clean balance sheet with very little external debt on the sovereign side,” said Rory MacFarquhar, of Goldman Sachs in Moscow.

Bankers also said a new offering would help to price the cost of borrowing for Russian companies, which are anxious to restructure some $423bn in outstanding foreign corporate debt.

Investor appetite has been warming towards Russia in recent weeks, with oil prices well above the $41 per barrel level that is factored into the Russian budget.

The country’s RTS stock exchange has risen 50 per cent in the past seven weeks as investors return to emerging markets. But bankers and government officials alike have warned of a likely surge in bad loans.

The Financial Times