Japanese Prime Minister Shinzo Abe on Friday made a widely expected decision to roll out additional fiscal spending - the latest attempt by Tokyo to revitalise a sputtering economy that has failed to break out of decades of stagnation.
Abe directed his cabinet earlier in the day to compile an extra budget for the current fiscal year, which will focus on steps to cushion the blow on some sectors following the Trans-Pacific Partnership free-trade deal, Finance Minister Taro Aso said.
"While aiming to achieve our goal of halving the primary budget deficit this fiscal year, we will compile measures that will lead directly to resolve problems Japan faces," Aso told reporters.
The government unveiled two separate packages of steps aimed at tackling Japan's shrinking population and easing farmers' worries over the TPP deal.
The extra budget will focus on these measures as well as other urgent steps such as disaster restoration, Aso added.
The government has not decided on the size of the extra budget but sources told Reuters last month that a supplementary budget worth over 3.1 trillion yen ($25.29 billion) would be considered, without issuing extra bonds to fund the spending.
The extra budget will be compiled next month along with an annual budget for the next fiscal year starting in April 2016. In the last fiscal year, the government complied a 3.1 trillion yen supplementary budget.
The additional fiscal impulse comes at a time of growing economic strains, with Japan's relapse into recession in the third quarter and a cooling China stoking uncertainty about the outlook.
With the Bank of Japan's 2 percent inflation goal seemingly more elusive than ever, Abe has been under pressure to step up support for an economy that has stagnated for decades.
"We will raise the sales tax again in two years and we need to make sure the economy is on solid footing beforehand," Economics Minister Akira Amari said, referring to the sales tax hike planned for April 2017.
"Right now we are in a critical period as we try to meet our economic growth target."