* Russian economy may contract 9 percent in 2009
* Growth to resume end 2009, early 2010
* Russia working on steps to diversify reserves
By Gleb Bryanski and Kyril Sukhotski
MOSCOW, June 23 (Reuters) - Russia's economy may shrink by up to nine percent in 2009 if stimulus funds fail to reach recipients but growth will resume by early next year and the banking sector won't collapse, the government's crisis manager told Reuters.
In a wide-ranging interview on Tuesday, First Deputy Prime Minister Igor Shuvalov, who heads the government's anti-crisis commission, also said Russia was working on new measures to diversify the investment of its foreign currency reserves, the world's third largest. Russia, the world's largest energy producer, was hit hard last year by the plunge in commodity prices, forcing it to spend a third of its reserves on defending the rouble. Despite a recent rally in commodities, the economy keeps contracting.
Economists polled by Reuters see the economy shrinking by 4.9 percent in 2009 while the World Bank on Monday said the contraction may reach 7.5 percent. Officials earlier said they saw gross domestic product (GDP) falling between six and eight percent.
"Maybe eight to nine percent. Maybe. But this is a pessimistic scenario in case we are not be able to spend budget funds on different investment projects planned for 2009," Shuvalov told Reuters financial television on Tuesday.
"It is too early to draw conclusions about how effective our anti-crisis policy was. We can draw conclusions when Russia returns to sustainable growth. We hope this period will come at the end of 2009 or in 2010," he said.
With banks too scared to lend and firms cutting their investment programmes, the budget becomes a major influence on output with the full-year figure directly dependent on how fast budget contractors get their money.
"Not all the contracts have been signed. We are in a hurry ... We are trying to allocate these funds according to contracts. If we do this work successfully, we will have totally different figures," Shuvalov said.
He added the crisis has ended previous excessive spending of windfall budget revenues. "The fact that it (the crisis) has happened now was good, really good," Shuvalov said.
ROUBLE RISKS
Despite the economic contraction, Shuvalov said he saw no depreciation risks for the rouble and the government was more concerned about the risks for exporters if the currency appreciates too much.
"We are afraid of a significant rise in energy prices because it will naturally have an impact on the rouble. The rouble will strengthen which is not very good for Russian industry," Shuvalov said.
After devaluing the rouble by a third earlier this year, Russia's central bank has set a wide trading band of between 26 and 41 roubles to a dollar/euro basket, intervening in the market to iron out what it sees as excessive volatility.
Shuvalov said the government wants to set strict limits on budget spending in 2010 based on a conservative oil price forecast to avoid a repetition of 2009 when the budget was first based on an overly optimistic forecast of $95 per barrel.
"The main thing now is not to make any decisions (regarding fiscal spending plans based on a certain price of oil) ahead of time ... We need to make decisions based on what we have," Shuvalov said, emphasising the need for efficient spending.
U.S. INVESTMENTS
Answering a question on whether Russia would cut its forex reserves investment in U.S. Treasuries if U.S. ratings were cut, Shuvalov said Russian authorities were "changing reserves placement policies in a smooth and competent way."
"We are indeed placing funds in U.S. papers and the dollar is the reserve currency but the Bank of Russia and the Finance Ministry are skilfully changing their policies based on the current realities," he said.
"I also know about some other draft projects and this means that we'll be putting our eggs in different baskets so we can feel confident," said Shuvalov, declining to disclose more information.
He said the government would support only 100-150 banks from its 1,100-plus banking system but if the economy picks up, "those loans which are non-performing today will turn into good ones tomorrow." (Editing by Ruth Pitchford)