MOSCOW, April 11 (RIA Novosti) - Russia's state debt will be growing in nominal terms from 2007 while shrinking as a percentage of GDP, the finance minister said Tuesday.

Alexei Kudrin said the government commission for budget projections had approved Russia's borrowing policy for 2007-2009.

In the finance ministry's estimates, government debt will increase through the buildup of domestic debt and its replacement of foreign debt, Kudrin said.

"From 2008, domestic government debt will be larger than government's foreign debt, and from 2007 the government will be borrowing money both for restructuring and current spending," Kudrin said.

The minister said that from 2007 domestic borrowings will be used to finance budget expenditure, and would not therefore affect inflation. The government could channel 31.4 billion rubles (about $1.1 billion) into budget expenditure financing in 2007, 50.4 billion rubles (about $1.8 billion) in 2008, and 63.3 billion rubles (about $2.2 billion) in 2009.

According to the finance ministry, government debt will equal 10.63% of GDP in 2006, 9.78% in 2007, 9.16% in 2008 and 8.71% in 2009.

Foreign debt will account for 60.2% of Russia's total state debt in 2006, with domestic debt at 39.8%. The proportion of foreign debt will fall to 53.5% in 2007, to 47.2% in 2008, and to 42.6% in 2009.