Japan's initial budget for fiscal 2021 is on track to set a record for the ninth straight year as the government increases reserve funds to deal with the coronavirus pandemic and due to rising outlays for defense and social security, government sources said Wednesday.

The sources said the total may even surpass ¥105 trillion — compared with the current fiscal year's ¥102.66 trillion — including ¥5 trillion set aside for reserve funds, which the government can spend without parliamentary discussion.

Additional debt issuance to finance the upcoming budget will further deteriorate Japan's fiscal health, which is the worst among major developed countries. Public debt exceeded ¥1.100 quadrillion as of the end of fiscal 2019, more than double its gross domestic product.

Prime Minister Yoshihide Suga's Cabinet is expected to approve the draft general-account budget late this month. It will be submitted to the ordinary Diet session to be convened in mid-January.

Amid the economic fallout from the pandemic, the government is expected to issue more new debt for the next fiscal year.