People walk across the Shibuya Scramble crossing in downt Tokyo on the first weekend after the COVID-19 state of emergency has been lifted on Saturday in Tokyo, Japan with the Tokyo Olympic Games only weeks away. Photo: VCG

Japan's former foreign minister Fumio Kishida, who is challenging Prime Minister Yoshihide Suga as ruling party chief, said on Thursday an economic stimulus package worth "tens of trillions of yen" was needed to combat the coronavirus pandemic.

Kishida also said Japan must maintain ultra-low interest rates to support the pandemic-hit economy, offering the clearest sign to date that expansionary fiscal and monetary policies would remain in place if he replaced Suga.

"Many countries are signaling that they will maintain expansionary fiscal and monetary policy steps for the time being. Japan must not fall behind," he told a news conference, shifting away from his prior remarks signaling the need to dial back the Bank of Japan's ultra-loose policy.

Kishida also said that as party chief, he would aim to bring socio-economic activities back to near normalcy by early 2022, criticizing the current handling of the pandemic as too little and too slow.

The party leader contest is slated for September 29, and the government is considering a plan to hold the general election on October 17. 

The winner of the ruling party leadership race is all but assured to become premier given the party's majority in parliament's powerful lower chamber.

Kishida said the stimulus package must be compiled "swiftly" and include cash payments to non-permanent workers and others who will be affected by steps to contain the flow of people.