UPDATE 1-Russia could halve 2010 borrowing plans-report

* Interfax agency cites finance ministry source

* National Wealth Fund may help fund deficit

* Deficit seen at 3.2 trillion roubles

(Adds details, background)

MOSCOW, July 23 (Reuters) - Russia could slash its 2010 sovereign borrowing plans by over 50 percent, covering more of the budget deficit with oil wealth funds instead, Interfax quoted a Finance Ministry source as saying on Thursday.

Russia slipped into budget deficit for the first time in a decade this year, and its finances are expected to remain in the red for at least two more years as the government keeps spending high to help the economy out of recession.

The source told Interfax news agency the 2010 deficit is planned at 3.2 trillion roubles ($103 billion). This year, the gap is expected to be 3 trillion roubles, although that excludes quasi-fiscal operations.

Finance Minister Alexei Kudrin has said the 2010 budget deficit would be 6.5 percent to 7.5 percent of gross domestic product (GDP), but he did not give a monetary figure. [ID:nL9441446].

Officials have pledged to keep the 2010 deficit below the 8-plus percent of GDP expected this year. [ID:nL9441446 ].

Previously officials have said Russia could borrow up to 1.3 trillion roubles domestically in 2010 -- twice as much as this year’s planned issuance -- and place some $10 billion in Eurobonds in its first issue since 2000.

There has even been indication that external borrowing could be doubled to $20 billion, taking the total issuance to some $60 billion, although analysts warned that this could make it harder for Russian corporates to get funding. [ID:nLL518308].

Under the possible new plan, the bulk of the 2010 deficit will be funded in the same way as this year -- from Russia’s oil wealth funds, amassed during years of economic boom fuelled by soaring commodity and energy prices.

As such, net borrowing -- both at home and abroad -- could total just 831 billion roubles ($27 billion).

“That is one of the latest plans,” the source told Interfax, adding that for the remainder of the deficit, 1.674 trillion roubles could be spent from the Reserve Fund, designed specially for the purpose of cushioning the budget through lean years.

A further 681 billion roubles could come from the National Welfare Fund. The NWF was originally intended for longer term projects, but Russian Prime Minister Vladimir Putin reiterated this week that some of the cash could be used to plug the deficit in the state pension fund.

As of July 1, the Reserve Fund was worth 2.96 trillion roubles, although at least 1.36 trillion of that is ear-marked to be transferred into the budget in the current quarter as part of ongoing contributions to this year’s deficit.

The NWF, also translated as the National Wealth Fund, was worth 2.8 trillion roubles [ID:nL1697189].

The source also told Interfax that next year’s budget revenues could be 6.636 trillion, against budget spending of 9.476 trillion and quasi-fiscal spending of an additional 346 billion roubles. (Writing by Oleg Shchedrov and Toni Vorobyova; Editing by Kenneth Barry)