Japan announced a Y7,200bn ($81bn) stimulus package that will help shore up the economy's fragile recovery, but also further strain state finances in a fiscal year when debt issuance will outstrip tax revenues for the first time since 1946.

Yesterday's package, which includes handouts for regional governments, jobs subsidies and support for environmentally- friendly products, had been delayed by demands from a tiny but vocal coalition partner in the new Democratic party-led government for more generous spending.

The pressure from Shizuka Kamei, leader of the People's New party and minister for financial services, heightened tensions with an already- fractious cabinet and forced DPJ ministers to agree to raise the value of the package by Y100bn.