Japan's cabinet approved a 13.2 trillion yen (121.5 billion U.S. dollars) fiscal package on Thursday to support stalling growth in the world's third-largest economy.

The spending package is one of the largest since the 2008 financial crisis, launching to repair typhoon damage, upgrade infrastructure and sustain activity beyond the 2020 Tokyo Olympics.

The package is expected to push up gross domestic product (GDP) by 1.4 percent through the fiscal year of 2021 and comes as Japan, like other major economies, looks to revive growth through spending as central banks rapidly run out of monetary policy options.

However, Tokyo is also seeking to balance its need for stimulus with its drive to reduce its massive public debt, which is more than twice the size of its GDP and the industrial world's largest debt pile.

"The current situation calls for all possible steps to prevent overseas risks from curbing not only exports but also capital spending and private consumption," the government said in a statement.

In compiling the package, Japan's heavily indebted government will need to tap stretched capacity to combat overseas risks and the impact of October's sales tax hike, while steering clear of fresh deficit-covering bond issuance.

That will require drawing from almost four trillion yen in fiscal investment and loan programs, as the government seeks to take advantage of low borrowing costs under the central bank's negative interest rate policy.

The spending will spread over a supplementary budget for this fiscal year to March and an annual budget for the coming fiscal year from April, both to be compiled later this month.

When government loans, credit guarantees and private-sector spending are included, the package comes to 26 trillion yen (239.3 billion U.S. dollars), of which 7.6 trillion yen is to be funded by direct government spending.

The Tokyo market welcomed the package, with the Nikkei index up 0.71 percent and the broader Topix climbing 0.48 percent.

(With input from Reuters, AFP)