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Japan government FY2016/17 budget request hit record $852 billion - sources

By Takaya Yamaguchi

TOKYO (Reuters) - Japan's government offices have requested 102.4099 trillion yen ($852.14 billion) for an annual budget for the next fiscal year from April 2016, the biggest amount ever, government sources told Reuters on Thursday.

The spending requests got a boost from areas such as social security in a fast ageing society and pro-growth policy steps, the sources said. They declined to be named as the amount has not been made official.

The requests, to be announced on Friday, highlight a challenge for Prime Minister Shinzo Abe's aim of achieving both economic growth and fiscal consolidation.

The welfare ministry requested 30.6675 trillion yen for social security spending, while requests related to growth areas amounted to 3.8529 trillion yen.

Of the total budget requests, debt-servicing costs accounted for a record 26.0543 trillion yen, due to ballooning public debt, and non-debt-servicing spending reached 76.3556 trillion yen.

The Ministry of Finance will scrutinise the budget requests and trim them before it drafts an annual budget in December, as Japan needs to rein in public debt that is already twice the size of its economy, by far the largest in the developed world.

The 2016/17 budget marks a key step in the government's plan to balance the primary budget, excluding new bond sales and debt servicing, by the fiscal year that ends in March 2021.

It follows fiscal guidelines Tokyo mapped out last month that called for limiting rises in general-account spending for the next three years, without setting a binding target.

The budget for the current fiscal year hit a record 96.3 trillion yen.

($1=120.1800 yen)

(Writing by Tetsushi Kajimoto; Editing by Clarence Fernandez)