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|Japan's Prime Minister Shinzo Abe (centre) inspects an area hit by Typhoon Hagibis in Koriyama, Fukushima prefecture on Oct 17, 2019. (Photo: AFP/STR/Jiji Press)|
The package is also aimed at helping the nation alleviate the impact of last month's tax hike and survive a potential economic slowdown after an Olympic boom.
"We will introduce a daring fiscal policy worth 13 trillion yen (US$120 billion)," Abe told ministers and party leaders at the prime minister's office.
"We have crafted a powerful policy package," Abe added.
The package, expected to be endorsed at a cabinet meeting later in the day, totals some 26 trillion yen if spending by the private sector is counted, according to public broadcaster NHK and other local media.
Under the plan, the government will spend some six trillion yen on public investment after a series of natural disasters - including killer Typhoon Hagibis - caused huge damage to the country's infrastructure, local media said.
Japan's economy has so far expanded this year, partially because of strong demand related to preparations for the Olympics, which will start in July next year. Some analysts warned the country may suffer a post-Olympic slump.
The package is also aimed at easing the impact of the consumption tax increase to 10 per cent from eight per cent on Oct 1 and helping Japanese firms prepare for a global economic slowdown due to the US-China trade dispute.
The Tokyo market welcomed the package.
"In particular, stimulus-related shares such as construction companies benefited from the announcement," Toshikazu Horiuchi, a broker at IwaiCosmo Securities, told AFP.
But Yusuke Shimoda, economist at Japan Research Institute, warned the impact of the package could be "limited".
"The package is likely to boost infrastructure-related businesses, but is unlikely to help reform the nation's slow-growth economy fundamentally," Shimoda said.
The package will also include government measures to help expand exports of farm products as a bilateral trade accord between Tokyo and Washington is set to take effect next year, Kyodo News said.
Among other steps, the government will help people in their 30s and 40s, who have been struggling to find work due to past economic slowdowns, to land new jobs, it said.