Japan's rapidly ageing population will push its public debt to new highs in 2004 despite cuts to defence, foreign aid and public works spending.
Japan's recovery is proceeding at a snail's pace
The draft 2004 budget, published on Wednesday, sees spending rise to 82.11 trillion yen ($760bn; £430bn).
Borrowing will rise 0.4% to more than 36 trillion yen or almost half the overall budget, a new record.
The rise is driven by a 4.2% increase in social security as the number of elderly Japanese swells.
The rapid growth in social welfare programmes comes as the cost of sustaining Japan's massive public debt - now amounting to nearly 140% of gross domestic product - is also expanding close to 5% in 2004.
Cuts elsewhere are offsetting some of the increases.
Defence is being cut 1% to 4.9 trillion yen, although that still leaves Japan's defence budget among the highest in the world.
Overseas aid spending is to fall almost 5%.
And public works - the building of roads, bridges and other projects which kept the politically powerful construction industry afloat through the past decade of deflation and economic slump, at the cost of massive debt - is dropping 3.5%.
Part of the problem is that while Japan is at least growing again after years of contraction, 2004 is set for a poorer showing than the current year.
The government is predicting a 1.8% expansion against 2% in 2003.
That is hitting tax revenues, and causing the continuing heavy debt.