The Japanese government is looking to finalize an economic stimulus package totaling US$120 billion (HK$936 billion) to support the economy and build infrastructure to cope with big natural disasters, government officials with direct knowledge of the matter said.
The spending would be earmarked in a supplementary budget for this fiscal year to next March and an annual budget for the coming fiscal year from April.
Both budgets will be compiled later this month, the sources said.
The package would come to around 13 trillion yen (HK$934.69 billion), but that figure rises to 25 trillion yen when private sector and other spending is included.
The Nikkei Business Daily reported on the weekend that the government was considering putting together a large-scale stimulus package with fiscal spending exceeding $92 billion.
Japan's economic growth slumped to its weakest in a year in the third quarter as soft global demand and the Sino-US trade war hit exports, stoking fears of a recession.
Some analysts also worry that an increase in sales tax to 10 percent in October could cool private consumption which has helped cushion weak exports. Such spending could strain Japan's coffers - the industrial world's heaviest public debt burden, which is more than twice the size of its US$5 trillion economy.
Despite the headline size of the stimulus, actual spending would be smaller in the current fiscal year, and economists are not expecting much of a boost.
"We expect this fiscal year's extra budget to total around 3-4 trillion yen. We should not expect it to substantially push up the GDP growth rate," said Takuya Hoshino, senior economist at the Dai-ichi Life Research Institute.