(Corrects 3rd paragraph to clarify election is next year, not this year)
TOKYO, Dec 17 (Reuters) - Japan's Finance Ministry is aiming to set a budget of 92 trillion yen ($1 trillion) for the next business year by trimming spending requests to meet the government's cap on new bonds issues, the Nikkei business daily reported.
The government has vowed to limit new bond issues to around 44 trillion yen in the year beginning next April, but investors are sceptical that this can be done given falling tax revenues.
Hammering out the budget will be difficult as ministries and ruling coalition parties are calling for more spending to avert a return to recession in the world's second biggest economy ahead of upper house elections in the middle of next year.
Spending requests will be cut by around 3 trillion yen, with one third of those cuts going in the face of campaign promises by the newly-elected Democrats, the paper said without citing sources.
The ruling coalition will present its budget proposals on Thursday and the ministry is aiming to decide budget figures by the end of this week, the Nikkei said.
The government is aiming to compile the budget by the end of this month before seeking the approval of parliament, which will convene in January.
Spending requests from Japan's ministries topped a record 95 trillion yen and the head of a small party in the coalition called for more stimulus spending to boost the economy.
General expenditures to implement policies, which exclude debt servicing costs and tax grants to local governments, is expected to hit a record 53 trillion yen, the Nikkei reported. ($1=89.85 Yen) (Reporting by Tetsushi Kajimoto; Editing by Edwina Gibbs )