MOSCOW—Russia said it would create a multibillion-dollar emergency fund for companies hurt by Western sanctions imposed over the Ukraine crisis—a sign that the country is girding for a long period of economic isolation.

The creation of the bailout fund, which will last at least through next year, comes amid increasingly frank admissions that, despite initial bravado about sanctions strengthening the nation and its domestic producers, Russia's economy is starting to hurt.

The Russian ruble fell to a record low of 38.5 against the dollar Monday before recovering slightly, as gloom deepened after Friday's new round of Western sanctions took effect, spurring fears of Russian retaliation.

Finance Minister Anton Siluanov said Monday that the government could divert at least 100 billion rubles ($2.65 billion), initially destined for pensions, to support companies facing sanctions-related financial troubles.

The economic impact is spreading far beyond the targeted companies and individuals, however. Companies are running short of capital, investors are pumping cash out of the country and consumers are reining in spending.