The Finance Ministry on Tuesday allocated 759 billion yen for official development assistance for fiscal 2006, down 3.4 percent from the previous year.
The figure represents the seventh straight year foreign aid has been cut due to the economic slump. In fiscal 1999, ODA spending totaled 1.04 trillion yen.
Of the 2006 foreign aid budget, 168 billion yen is earmarked for grant aid projects, down 4.7 percent from the previous year, and 55.7 billion yen will be spent for projects sponsored by international organizations, down 3.8 percent.
The Finance Ministry has set aside 7 billion yen in grant aid for counterterrorism efforts, including purchases of surveillance equipment at airport and seaports, and projects aimed at stabilizing developing countries to prevent them from becoming havens for terrorists.
Another 3.5 billion yen in grant aid will be allocated to overseas disaster prevention and reconstruction activities.
Indonesia and other South and Southeast Asian countries suffered in the tsunamis that struck last December, while Pakistan was hit by a massive earthquake in October.
The Foreign Ministry in August requested an 11.9 percent year-on-year increase in its ODA budget to 546.3 billion yen, but the Finance Ministry gave the ministry 473.3 billion yen in its draft budget, a cut of 3.0 percent.
However, ODA spending in the supplementary budget for fiscal 2005, which was also approved by the Cabinet on Tuesday, rose to 32.3 billion yen, about twice the amount of last year's supplementary budget.