Russia's budget deficit for the first half of the year stood at 2.6 trillion roubles ($28.26 billion), narrowing sharply in June as spending fell and revenues picked up, showing that some efforts to wrestle control of the fiscal hole have borne fruit.

In the first half of last year, Russia posted a surplus of 1.48 trillion roubles, but significant outlays to support its military campaign in Ukraine and a barrage of Western sanctions on its oil and gas exports have hit government coffers since then.

Soaring defence spending has kept Russia's industrial sector ticking along, spawning forecasts for economic growth this year and helping Moscow to plough on with its military campaign in Ukraine. ($1 = 91.9955 roubles) (Reporting by Darya Korsunskaya and Alexander Marrow)