Russia's military budget could fall by as much as 10% in 2015, according to the chief executive of Rostec.

Russia is experiencing rapid economic decline, spurred by the dramatic fall in oil prices last year and a wave of punitive economic sanctions imposed by the United States and the European Union over its role in the Ukraine crisis.

Russia's ruble fell dramatically in the second half of 2014 along a similar trajectory to the global oil price. The ruble was trading at 64 against the dollar on Monday afternoon (23 February) in London.

Russia's Finance Minister Anton Siluanov last month recommended spending cuts across all sectors of the Russian government this year, with each department being forced to trim 10% from their budgets, although defence spending was said to be immune from the cuts.

But the cuts could even impact on defence spending in the country, according to Putin's ally Sergei Chemezov, chief executive of state-owned defence firm Rostec.

"It could shrink a bit, within 10%, but a decision is not yet made," Chemezov told reporters on Monday.

"Sanctions have given us a kick to produce our own [equipment]," he said. "Before sanctions we procured from Ukraine, which has many defence plants and factories. By 2017, we plan to substitute all our imports."

Russian defence sales could provide a valuable source of hard currency for the country at a time when revenues from oil exports have plunged and Russian companies are struggling to access global financial markets, in the wake of Western sanctions.

Rostec is expected to record sales of 1.3tn rubles last year (£13bn, $20bn) in 2014, up from 1.04tn rubles in 2013, Chemezov said.