The Cabinet on Friday earmarked ¥1.13 trillion in reserve funds to continue measures to cushion the impact of the coronavirus pandemic.
Of the total, ¥915 billion will be allocated to a cash benefit program of up to ¥2 million each to small and midsize firms that have seen a sharp drop in sales due to social restrictions implemented to slow the virus's spread.
"The Cabinet decided to use the reserve fund to ensure that the government can smoothly implement some countermeasures that are expected to run short of necessary funding," Finance Minister Taro Aso told a news conference after the Cabinet decision.
For households whose income has fallen sharply, the government will allocate ¥177.7 billion for a no-interest loan program providing up to ¥200,000.
To beef up quarantine steps such as conducting polymerase chain reaction (PCR) tests for visitors from foreign countries, the government will set aside ¥33 billion.
The latest money comes in addition to a total of ¥11.5 trillion in reserve funds already dedicated by the government to the fight against the pandemic, which were part of the first and second supplementary budgets for fiscal 2020 .
Opposition parties have demanded Prime Minister Shinzo Abe's government explain in detail their plans for the funds, given the scale of the outlay.
The Diet's ordinary session closed in June, but the opposition camp has been calling for an extraordinary session to be convened.
Abe's Liberal Democratic Party has been reluctant to convene an extra session so soon. The government briefed executive members of the Budget Committee in both chambers of the Diet about the use of the reserve fund, during closed-door sessions Friday.
Abe declared a state of emergency on April 7 for Tokyo and six other prefectures, and later expanded it to the whole nation. The government requested people stay at home and that nonessential businesses suspend operations, dealing a blow to the economy.
The state of emergency was fully lifted on May 25 and many areas in the country have since seen a resurgence in infection rates.