Mr Alexei Kudrin's comments came as the ruble and Russian stocks continued to fall as the country struggles through its worst economic crisis in a decade and as the Central Bank said it would scale back its defense of the national currency.

In remarks before the Russian upper house of parliament, Mr Kudrin forecast oil prices to average US$50 (S$75.36) a barrel next year and US$55 in 2010, but said 'it would not affect the spending plans in any way.'

'There is no doubt we will meet our obligations,' he said before the chamber approved the government's latest three-year budget.

Weaker oil prices hurt Russian finances, as the country is a major energy producer.

The Russian government forecast oil prices at US$95 a barrel for 2009 budget but Urals blend crude - the primary kind of oil produced by Russia - was down to US$53 on Wednesday.

To make up for the state's lower oil profits, Mr Kudrin said the government was considering tapping the massive Reserve Fund. The fund consists of oil taxes and was set up several years ago to give the government a cushion against economic blows.

Before the crisis hit, talks of tapping the fund was all but taboo.

'We will be using the Reserve Fund if oil profits are less than they are described in the budget,' Mr Kudrin said Russia has already tapped its National Welfare Fund to offer US$16.3 billion in long-term loans to banks, with US$6.7 billion going to support the battered stock market.

The Reserve Fund, which reached US$130 billion by Nov, has so far remained untapped.

The ruble, meanwhile sank to at 27.5 rubles against the US dollar by early afternoon, 0.17 ruble weaker than on Tuesday. That extended the previous day's losses, when the Central Bank let the currency lose half a ruble against the dollar.

On Tuesday, the Central Bank loosened its 'managed float' policy, preferring instead to raise interest rates by a full percentage point to make the currency more attractive to foreign investors.

The move showed few signs of success, but triggered instead a further sell-off in both the currency and stocks. One Moscow-based analyst described the policy change in a morning investor note as 'opening of Pandora's box.'

The ruble-denominated MICEX, where most of Russia's trading takes place, lost 12.6 per cent on Tuesday prompting regulators to shut it down until Thursday. The other exchange, RTS, lost 10.7.

The RTS was down 12.5 per cent by 1.05 pm (5.05 pm) when trading was suspended for one hour because of a steep decline.

Russia has burned through billions of dollars in foreign currency reserves to keep the ruble from falling below 30.40 against the dollar in a practice called a 'managed float.'

But the Central Bank has said it wanted to gradually move away from such practices interventions in currency markets to rely instead on interest rate policy to control the value of the ruble.

The bank on Tuesday raised a key interest rate by a full percentage point, to 12 per cent, in an effort to stem breakneck capital flight, increase the appeal of the ruble and ease inflation.

Official reports say capital worth $50 billion fled Russia in Oct.

Analysts have said the government will have to move carefully to avoid triggering panic among Russians, whose confidence is being eroded after an oil-fueled eight-year boom. -- AP