Ratings agency Standard & Poor's on Monday raised its outlook on Russia's debt ratings to stable from negative, citing lower-than-expected budget deficits due to strong oil prices and cuts in state expenditure.

"The stable outlook balances our opinion of the risks to Russia's public finances from sensitivity to oil prices and the need for additional capital injections into the financial system, against the conservative budgetary stance," it said.

S&P said it had revised its outlook on Russia from negative while affirming its 'BBB/A-3' foreign currency and 'BBB+/A-2' local currency sovereign credit ratings.

The agency said it expected that the government's original target of a budget deficit of 8.3 percent of GDP for 2009 would turn out to be lower by at least one or two percentage points.

"In the absence of a sharp decline in oil prices back below $60 per barrel, we would expect the Russian Federation's budgetary position to shift back to surplus by 2012," it said.