TOKYO, Dec. 21 (Xinhua) -- Japan's cabinet on Monday approved a record 106.61-trillion-yen (1.03 trillion-US dollar) draft budget for fiscal 2021, with the amount reaching an all-time high for the ninth straight year.

Commuters wearing face masks walk along a concourse at Shinagawa station in Tokyo on December 10, 2020. (File photo: AFP)

Amid rising coronavirus infections and a healthcare system beginning to buckle in places due to the third wave of the pandemic hitting the country, 5 trillion yen will be set aside for reserve funds to be spent on future endeavors to tackle the coronavirus pandemic.

"Amid the coronavirus spread, the hardest part was that we had to strike a balance among preventing infections from spreading, revitalizing the economy and restoring fiscal health," Finance Minister Taro Aso told a press conference following the approval of the budget by the cabinet.

The draft budget, surpassing 100 trillion yen for the third successive year, will also see a record 35.84 trillion yen, roughly one-third of the entire budget, earmarked for social security spending.

This comes amid Japan's demographic crisis of a rapidly aging and shrinking population, the former of which has led to ballooning social security and pension costs and in tandem with the latter has seen the hollowing out of the recession-hit nation's core workforce.

The defense budget, which has expanded for a ninth straight year, allocates 33.5 billion yen for the development of controversial standoff missiles, capable of striking targets from outside their firing range.

The defense ministry's plans to also build two more vessels equipped with Aegis missile interceptor systems, has been met with resistance from opposition lawmakers who have maintained the move runs contrary to Japan's pacifist Constitution and defense-only posture.

The budget, in part, will be financed by new bond issuances, which will rocket by 11.04 trillion yen from the current year's initial plan to 43.60 trillion yen.

On an initial basis, this marks the first year-on-year rise in 11 years.

On this point Aso said it is "regrettable that the bond dependency ratio is expected to rise again due to the pandemic, though it has improved from about 47 percent in fiscal 2012 when the ruling Liberal Democratic Party returned to power."

Tax revenues, meanwhile, come to around 57.45 trillion yen, larger than the downwardly revised estimate of 55.13 trillion yen in fiscal 2020, owing to solid corporate earnings and increases in tax.

Compared with 31.7 percent in the current year, 40.9 percent of the budget will be funded by debt, with the record budget fueling mounting concerns about the deterioration of Japan's fiscal health, with public debt standing at more than twice the size of Japan's economy.

The draft budget which includes 23.76 trillion yen in debt-servicing costs, will be submitted to an ordinary parliamentary session to convene in January. (1 US dollar equals 103.6 Japanese yen)