Finance Minister Alexei Kudrin said Wednesday that the Reserve Fund would be "practically exhausted" in 2010, and the government will have to cut spending to trim a budget deficit that is estimated at 7.4 percent this year.

"The period of spending increases is ending," Kudrin told lawmakers. "In the coming years, we will have at least to keep spending at the current level for many sectors, but for some we won't even be able to do this, and programs will have to be reduced."

Russia's two sovereign wealth funds fell in March to a combined 7 trillion rubles ($206.1 billion) as the government began transferring money to cover its first budget deficit in a decade. The government expects revenue to drop by 30 percent this year as the economy enters its first recession in 10 years and tax revenue tumbles on slowing demand at home and abroad.

The Reserve Fund fell to 4.1 trillion rubles at the start of the month, and the National Welfare Fund stood at 2.9 trillion rubles, according to the Finance Ministry. The government is forecasting a 2.2 percent economic contraction this year after a decade of expansion.

The revised budget could be changed to seek new funds to recapitalize banks should the level of bad loans in the banking sector exceed 10 percent, Kudrin said.

Overdue loans in the sector currently stand at 7.5 percent, Kudrin said in an interview with Vedomosti published Wednesday.