Japanese Prime Minister Fumio Kishida approved a record stimulus package along with unprecedented defense spending on Friday, aiming to jump-start the country's ailing economy and muscle up its military power.

The stimulus package, which comprises 55.7 trillion yen ($490 billion) in fiscal spending, will cover cash handouts and aid to businesses weakened by the COVID-19 pandemic.

On Friday, Kishida told a meeting of government and ruling party executives that in order to deliver necessary aid to the public quickly, the government will compile an extra budget by the end of this year to fund the package.

According to Kyodo News Agency, the extra budget will also include record military spending of around 770 billion yen for Japan to improve military facilities, and buy missiles and patrol aircraft.

Kishida's proposal was approved by his Cabinet on Friday but it still needs parliamentary approval, which is expected next month.

However, because the size of the package had surpassed that of a 48.4 trillion yen-stimulus program compiled in April 2020 by then-prime minister Shinzo Abe, analysts warn that the measures could place further strain on the country's already tattered finances.

Inside the package, around 2 trillion yen will fund 100,000 yen in cash handouts and vouchers to every child in households with an annual income of less than 9.6 million yen.

For business, the government will pay up to 2.5 million yen each to smaller companies that saw sales slump during the pandemic.

To boost domestic tourism, a subsidy program called Go To Travel will be resumed as early as January to help hotels and airlines. The campaign was suspended nationwide in December 2020 due to a spike in coronavirus infections.

The government will create a 10 trillion yen fund for universities to spend on cutting-edge technologies research and it will set aside 500 billion yen in subsidies and craft legislation to build domestic semiconductor factories and strengthen supply chains.

Among other measures, the government will give shopping points worth up to 20,000 yen to individuals who already have or newly acquire the unpopular "My Number" identification cards to promote the nation's digitalization.

Yuzo Tanaka, a professor of economics at Ryukoku University in Kyoto, said that although the package was much bigger than the 30-40 trillion yen estimated by markets and may increase risks for the nation's finance sector, the payments are likely to be more effective than previous ones.

"Due to an improved situation of coronavirus, people are more likely to go out, to go shopping and thus it is easier to promote consumer spending this time," Tanaka said.