Russia is looking to borrow $18 billion abroad next year to help fund its budget deficit, while revenues could get a $2 billion boost from higher taxes for the gas sector, a Finance Ministry source said Friday.

The budget and the scale of borrowing have been the subject of hot debate as the government seeks the best way to fund the high spending needed to see the economy out of recession.

Under the latest plan, the bulk of the deficit will be funded from Russia’s oil wealth funds, amassed during years of economic boom fueled by soaring oil prices. External borrowing will also provide a sizeable contribution, while the burden on domestic markets is less than previously expected.

“We decided to take more from the [National Welfare Fund] so that we can reduce borrowing and lower [the cost of] servicing,” the source said.

The figures were discussed at a meeting with Prime Minister Vladimir Putin on Thursday and will be the topic of a meeting with President Dmitry Medvedev on Friday.

“Final decisions have not been made,” the source said.

Next year’s deficit is expected to reach 3.2 trillion rubles ($103 billion), or 7.5 percent of gross domestic product, including a contribution to a rescue fund for five ex-Soviet states and cash for the recapitalization of banks through special OFZ treasury bonds. The Reserve Fund, designed to cushion the budget through lean years, is expected to contribute 1.55 trillion rubles in 2010, the source said.

A further 680 billion rubles could come from the National Welfare Fund. The fund was originally intended for longer-term projects, but 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 rubles, although 1.36 trillion of that is earmarked to be transferred into the budget in the third quarter as part of ongoing contributions to this year’s 3 trillion ruble deficit. The National Welfare Fund was worth 2.8 trillion rubles.

The 2010 contributions from the two funds add up to 2.2 trillion rubles. The source did not specify domestic borrowing plans, but at current exchange rates the $18 billion penciled in for external borrowing is worth about 560 billion rubles, leaving less than 500 billion left to raise at home.

That would be in line with this year’s borrowings and half as much as Russia was previously expected to place on the domestic bond market in 2010.

In contrast, the external borrowing figure is toward the upper end of the $10 billion to $20 billion range previously discussed.

The government hopes that its first eurobond issue in a decade will make it easier for Russian corporates to seek financing abroad. But analysts have warned that too big a placement could have the opposite effect by raising the risk premium across the board.

On the revenue side, a proposed hike in the gas export tariff is expected to bring in 53 billion rubles, while an increase in gas extraction tax adds another 7 billion.