TOKYO (REUTERS) - Japan's government approved on Saturday stimulus spending worth 3.5 trillion yen (S$38 billion) aimed at helping the country's lagging regions and households with subsidies, merchandise vouchers and other steps, which it hopes will boost GDP by 0.7 per cent.

The package was unveiled two weeks after a massive election victory by Prime Minister Shinzo Abe's ruling coalition gave him a fresh mandate to push through his "Abenomics" stimulus policies.

Given Japan's dire public finances, the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenue that has exceeded budget forecasts due to economic recovery.