TOKYO (REUTERS) - The Japanese government is likely to trim new bond issuance in next fiscal year's budget from the current level, while keeping fresh borrowing below tax revenue for the first time in four years, government sources said today.

The amount of new bond issuance is expected to be at or below 43.1 trillion yen (S$580 billion), less than the 44.2 trillion yen included in the initial budget for the current fiscal year that ends in March, the sources told Reuters.

New borrowing would match or undershoot tax revenue of around 43.1 trillion yen for the next fiscal year from April, the sources said.

Government spending, excluding debt servicing costs, is likely to be about 70.5 trillion yen, slightly less than the 71 trillion yen earmarked in the initial budget for the current fiscal year, they added.

The government is expected to compile a draft budget next week for the 2013/14 fiscal year, with the aim of limiting new bond issuance as much as possible to maintain confidence in the government bond market.

The previous government led by the Democratic Party had agreed to limit new bond issuance to 44 trillion yen annually and spending excluding debt servicing to 71 trillion yen.