TOKYO: Japan will submit a record extra budget to finance its massive stimulus package aimed at lifting the world's second-largest economy out of the deepest recession since World War II, officials said Tuesday.

Finance Minister Kaoru Yosano said the government would submit the budget to parliament on Monday and plans to issue bonds worth 10.82 trillion ($110 billion) yen to help finance the spending.

Japan is grappling with an unprecedented collapse in global demand. Its economy shrank an alarming annual 12.1 percent in the October-December quarter, marking the severest contraction since the oil shock of 1974.

The government hopes the new stimulus package, which calls for a record 15.4 trillion yen ($157 billion) in government spending, will ward off further economic deterioration, protect people's livelihoods and foster future growth.

The government has forecast zero-percent growth for the current fiscal year starting in April.

But the Yomiuri daily and the Nikkei business paper said Tuesday the government will revise down the outlook to a contraction of around 3 percent due to a deepening global downturn.

Officials at the Cabinet Office and the finance ministry declined to confirm the report.

The stimulus package is equivalent to about 3 percent of Japan's gross domestic product.

Borrowing to fund the stimulus will expand Japan's already ballooning public debt, which at 170 percent of GDP is the highest among industrialized economies.

Yosano said the government will issue bonds in a way that does not "create any unexpected impact on the markets." Since Prime Minister Taro Aso took office in September last year, Japan has approved two stimulus packages worth 12 trillion yen in fiscal spending.

Apart from helping the jobless and cash-starved small businesses, the latest stimulus package includes an incentive to encourage car purchases similar to the "cash for clunkers" program debated in the U.S. Congress.

The government will give 250,000 yen to consumers who trade in a car 13 years or older for a more fuel-efficient car.