TOKYO The Japanese cabinet on Sunday approved a budget totalling 82.65 trillion yen ($738 billion) for the next fiscal year with the aim of securing the recovery of the world's second-largest economy.

Prime Minister Yoshiro Mori's cabinet approved the budget for the year starting April 2001, AFP quoted a spokesman for the prime minister's office as saying.

The budget, which will be submitted for parliamentary approval in January, marked the first spending cut in six years, down 2.7 percent from the current year's initial budget, because of lower debt repayment costs.

But it included a record 48.7 trillion yen in general spending, the largest component of the budget which covers everything from defense to education, in an effort to spur Japan's snail-paced economic recovery.

Finance Minister Kiichi Miyazawa said the budget would help secure economic revival.

"Under this budget, the economy will take a self-sustained recovery track," Miyazawa told a news conference.

Chief cabinet secretary Yasuo Fukuda said the government had prioritized stimulating the economy over fiscal reform.

"Economic recovery is the most important element" in compiling the budget, Fukuda told a news conference.

"At the same time, the government must implement structural reforms. We are carrying out the reforms to the extent that it does not foil economic recovery," he said.

While Tokyo made its fresh vows to spur growth, concerns about the U.S. and Japanese economies were increasing.

On December 21, the U.S. government revised down its economic growth in the third quarter to 2.2 percent, against its earlier forecast of 2.4 percent.

"Economic recovery is the foremost task for Japan. The budget reflected our resolve to achieve that goal," a Finance Ministry official said.