Prime Minister Yoshiro Mori on Friday ruled out cutting the amount of discretionary funds budgeted for the upcoming fiscal year despite the recent embezzlement case centered on the funds.

"(The incident) will not lead to a revision to the proposed fiscal 2001 state budget," Mori told the Lower House Budget Committee, brushing aside an opposition demand that the government reduce the allocation.

Mori was responding to a demand by Kanju Sato of the Democratic Party of Japan, who said the funds should be cut following allegations that a senior Foreign Ministry official pilfered them for personal use.

The proposed budget for fiscal 2001 sets aside 1.62 billion yen in discretionary funds to the Cabinet Secretariat and 5.58 billion yen to the Foreign Ministry.

Finance Minister Kiichi Miyazawa sided with Mori, saying the opposition is "jumping to hasty conclusions" by demanding cuts.

The Foreign Ministry and Cabinet Secretariat have filed criminal complaints against Katsutoshi Matsuo, who allegedly siphoned off at least 54 million yen to support an extravagant lifestyle.

Matsuo headed a Foreign Ministry division between 1993 and 1999 charged with organizing overseas trips for Japanese VIPs and had been entrusted with the Cabinet Secretariat's discretionary fund of 965 million yen during his tenure.

In a related move, the Liberal Democratic Party said Friday it will launch its own investigation next week to further scrutinize the incident, claiming a report compiled by the Foreign Ministry in January was "lukewarm."

Meanwhile, both Foreign Minister Yohei Kono and Chief Cabinet Secretary Yasuo Fukuda have rejected opposition demands that copies of the criminal complaints they filed against Matsuo be submitted to the Diet. Both ministers have cited the possible obstruction to investigations that the revelation may cause.