Tokyo, Dec 19 (IANS): The Japanese government is set to announce a record-high budget of some 96.7 trillion yen ($798 billion) for the next fiscal year.

The budget was compiled to cope with the nation's dire demographic circumstances and related welfare costs, Xinhua cited sources as saying on Saturday.

The government also eyes record revenue from taxes.

The draft budget is likely to jump to 96.7 trillion yen, from initial estimates of around 96.3 trillion yen, as costs associated with social welfare swell, as the population here continues to rapidly age and shrink, sources said.

They also said the record budget had taken into account rising military costs following Prime Minister Shinzo Abe recasting the military and the necessity to recruit and train more personnel and update hardware as Japan could be drawn into conflicts overseas, despite the public's unwavering opposition.

The new budget is expected to be approved by the cabinet on Thursday before it is sent to parliament for ratification in January 2016.

The government is, in part, planning to raise the capital to fund the record new budget through the issuance of new debt to the tune of a relatively low 34 trillion yen, but is eyeing freeing up tax revenue at a 25-year high of 57.6 trillion yen ($475.25 billion) in fiscal 2016, from increasing corporate profits amid an embryonic economic recovery.

According to initial estimates, around 32 trillion yen will be allocated from the budget to deal with the nation's swelling social security costs, with defence spending likely to top 5 trillion yen.