The Nikkei business daily reported on Friday that Japan's economic stimulus package will necessitate fiscal spending totaling 40 trillion yen ($350 billion), with a draught of the spending plan including steps to alleviate the pain of rising oil prices.

Prime Minister Fumio Kishida, bolstered by an election victory last month, has pledged to put together a stimulus package "worth several tens of trillion yen" on Nov. 19 to help the world's third-largest economy recover from the coronavirus.

As Kishida prioritizes recovery from the pandemic over fiscal reform, the spending is likely to be financed by new debt, adding to the industrial world's heaviest public debt, which is more than twice the size of Japan's economy.

Analysts were taken aback by the larger-than-expected spending plan. "The spending is far bigger than the output gap of 22 trillion yen. (Kishida) must be coming under pressure to boost spending ahead of next summer's upper house election," said Saisuke Sakai, senior economist at Mizuho Research and Technologies.

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Soaring global crude oil prices, as well as a chip shortage and supply-chain constraints, harmed a trade-dependent economy that was seen contracting in the third quarter as pandemic restrictions and supply bottlenecks hampered consumption and output.

"We will prepare flexible measures on soaring energy costs in the coming stimulus package," Economy Minister Daishiro Yamagiwa told reporters earlier on Friday.

Other measures to be included in the package include steps to increase domestic semiconductor production as well as a 10 trillion yen ($87.5 billion) fund aimed at providing universities with more resources to boost science and technological research, according to the draught.

The spending plan will also benefit from cash payouts to citizens aged 18 and under, which will cost about 2 trillion yen, and to small businesses hit hard by the pandemic, which will cost about 3 trillion yen, according to the Nikkei. It includes resuming tourism promotion to boost demand following the pandemic.