Prime Minister Shinzo Abe announced the decision at a news conference, where he said the measures were intended to add 2 percent to Japan’s economic growth and contribute 600,000 jobs.
Mr. Abe urged the central bank to move more aggressively to encourage lending and meet a clear inflation target.
Mr. Abe took office late last month after a parliamentary election victory by the Liberal Democratic Party, which is touting public works spending and subsidies to strategically important sectors as part of its plan to pull the economy out of recession.
The proposal also raises military spending by $1.1 billion from the $52.3 billion budget last year, the first such increase in a decade. The increase is partly aimed at beefing up monitoring and defenses around islands in the East China Sea that are the focus of a simmering territorial dispute with China.
• From wire dispatches and staff reports