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Japanese Prime Minister Fumio Kishida is set to unveil on Tuesday a package of measures aimed at reversing the dwindling birthrate, by increasing payouts to families with children.

The announcement of his flagship policy comes amid market speculation that Kishida will dissolve parliament this week and call a snap election, a move that could heighten calls from within his ruling party for big spending.

Although an election for parliament's powerful lower house is not due until late 2025, Kishida, who swept to power in October 2021, is keen to boost his grip on power in the party ahead of a leadership race next September, analysts say.

The package, which Kishida is likely to explain at a press conference, may help his party appeal to the public with promises of payouts.

Kishida has said he hopes to double child care spending, now about 4.7 trillion yen ($33.7 billion), by the early 2030s.

Under the plan, the government is likely to earmark about 3.5 trillion yen annually for the next three years for child care allowances and support for those taking child care leave.

The government will also urge companies to allow employees to choose more flexible working styles such as taking three days off a week, according to a draft of the package obtained by Reuters.

Analysts, however, doubt whether the package will do much to stem a chronic decline in the birthrate and Japan's rapidly ageing population.

"While the steps could help families with children, the real problem that must be dealt with is how to support low-income households unable to get married," said Toru Suehiro, chief economist at Daiwa Securities.

There is uncertainty on how the government will fund the measures, with Kishida ruling out the chance of a near-term tax hike, stoking fears of a worsening of Japan's already tattered finances.

The government will work out the details of securing stable sources of funding by year end, officials have said.

Japan's birthrate has been on a steady decline despite a series of government initiatives to reverse the trend, dropping to a record low of 1.26 last year from 1.57 in 1990, government data shows. (Reuters)