TOKYO (Kyodo) -- The government will compile a record 115.5 trillion yen ($734 billion) initial budget for fiscal 2025 as defense and social security spending continue to rise while debt-servicing costs also weigh on Japan's public finances, sources close to the matter said Wednesday.

The draft general-account budget for the year starting in April will surpass the previous record of 114.38 trillion yen for fiscal 2023. Tax revenues for the new fiscal year are estimated at around 78.4 trillion yen, a record high for the sixth consecutive year, the sources said.

Despite possible record revenues, the government plans to issue new bonds worth 28.6 trillion yen that will add to the pressure on the nation's fiscal health, already the worst among major advanced economies.

Social security spending will rise to around 38.3 trillion yen due to the nation's aging population, while expenses for strengthening defense capabilities will reach around 8.5 trillion yen, according to the sources.

Prime Minister Shigeru Ishiba has said his Cabinet will approve the draft budget on Friday before submitting it to parliament.

After losing its majority in the House of Representatives following October's general election, the ruling coalition led by Ishiba's Liberal Democratic Party may be forced to revise the draft in response to requests by opposition parties.

The draft also compares with the initial budget for the current fiscal year of 112.57 trillion yen, which marked the first decline in 12 years due to one-off factors such as a reduction in emergency spending on measures to deal with the COVID-19 pandemic.

The Cabinet Office said Wednesday that the Japanese economy is projected to grow 1.2 percent in real, or inflation-adjusted, terms and 2.7 percent in nominal terms in fiscal 2025, compared with an estimated 0.4 percent and 2.9 percent growth in fiscal 2024, respectively.

The country's nominal gross domestic product is projected to reach 629 trillion yen in fiscal 2025, against an estimated 613 trillion yen in the current fiscal year, according to the office.