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Japan readies record $800B 2015-16 budget - sources

Japanese Prime Minister Shinzo Abe.
Pablo Blazquez Dominguez | Getty Images
Japanese Prime Minister Shinzo Abe.

Japan's government will propose a record budget for next fiscal year of more than $800 billion but cut borrowing for a third year, government officials said on Sunday, as Prime Minister Shinzo Abe seeks to maintain growth while curbing the heaviest debt burden in the industrial world.

The third annual budget since Abe swept to power in late 2012 also highlights his struggle to contain bulging welfare costs for the fast-ageing society while increasing discretionary spending in areas such as the military.

Abe's 96.3 trillion yen ($813 billion) draft budget for the year from April, to be approved by the Cabinet on Wednesday and submitted to an upcoming session of Parliament, is up from this fiscal year's initial 95.9 trillion, the two officials told Reuters.

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But spending restraint and a surge in tax revenues as the economy recovers allows the government to cut bond issuance by 4.4 trillion yen to 36.9 trillion, the lowest in six years, the officials said.