Moscow - Russian arms manufacturers need urgent help from the state to meet their defence orders amid the global credit crunch, Deputy Prime Minister Sergei Ivanov said Tuesday.

Russia is the world's second-largest weapons exporter after the United States, and the Kremlin's aggressive salesmanship has produced a flush of billion-dollar deals in recent months.

But the industry is facing a cash drought that is threatening state-owned manufacturers' ability to carry through contracts, the news agency Interfax cited Ivanov as saying.

"The global financial crisis is affecting some defence producers quite drastically," said Ivanov, who oversees military spending.

"A whole series of defence producers are experiencing a sharp cashflow shortage toward ensuring the release of finished products and transfer to their customers," he said.

Speaking at a commission on strategic sectors and the defence industry, Ivanov advised the government to extend the sector low- interest, emergency loans through state banks.

He added such a measure would "ensure cash flow, including for paying wages to staff."

The Kremlin announced a 25 per cent hike in defence spending for 2009, as part of a wide-sweeping effort to reform and reequip its ageing military complex. (dpa)