TOKYO (Kyodo) -- Japan's initial budget for fiscal 2025 is likely to total more than 113 trillion yen ($735 billion) as spending on social security and national defense continues to rise, sources close to the matter said Wednesday.

The annual budget, the first for Prime Minister Shigeru Ishiba's government, could surpass the record 114.38 trillion yen package compiled in fiscal 2023, sources said. It exceeds the 112.57 trillion yen allocated for the current year, which marked the first decrease in spending in more than a decade.

Ishiba's Cabinet is expected to approve the draft budget later this month and submit it to parliament for deliberations early next year. Japan's fiscal year starts in April.

The increased budget contributes to Japan's deteriorating fiscal health, which is the worst among major developed countries.

The planned spending could increase further during deliberations as the ruling coalition, which lost its House of Representatives majority in October's general election, is likely to have to negotiate changes with opposition parties.

Government offices have requested a total of 117.61 trillion yen in spending in the latest budget, with the Finance Ministry assessing their requests in drafting work.

The Health, Labor and Welfare Ministry requested a record 34 trillion yen to finance social security measures that are becoming increasingly costly in the rapidly aging nation.

The Defense Ministry's requests exceeded 8 trillion yen for the first time to cover missile development and other costs, with Japan facing regional instability related to China, North Korea and Russia.

Interest payments and other debt-servicing costs for the country are expected to rise to nearly 29 trillion yen in the next fiscal year, according to the Finance Ministry.