Rebutting opposition charges that the budget was a vote-winning ploy to boost the ruling party's new leadership ahead of a potential early election in the coming months, Lee said the budget was meant to prepare Singapore citizens for the long-term challenges of globalisation.

"This budget is not a mere Hong Bao to get votes," he said in a speech to parliament, referring to the Chinese tradition of giving money in red envelopes to the young during the Lunar New Year.

"This budget makes the right long-term commitments so that the government wins not just the next election but also the mandate to govern over successive terms," Lee said.

Senior leaders of the ruling People's Action Party (PAP), which has had a stranglehold on parliament since independence in 1965, have said that Lee would call for elections this year.

The government also said on Wednesday that a report marking out the electoral boundaries was ready and would be made public later this week. Opposition politicians have accused the government of gerrymandering in the past by drawing up the electoral boundaries to their advantage.

Since 1988, elections in Singapore have been called within two days and up to two months from the issue of the report.

Lee -- who was appointed prime minister in August 2004 -- announced on Feb. 17 a S$2.6 billion (US$1.6 billion) budget spending package flush with handouts, including a S$200 handout for every adult Singaporean, discounts on housing and utilities charges and up to S$400 for all army conscripts.

But Workers' Party chief Low Thia Khiang, who holds a seat in parliament, said this week the cash giveaways were an election ploy and that these one-time cash handouts were only a temporary way of alleviating Singaporeans' financial burdens.

Low also accused the government of repeatedly giving out money before elections, only to take it back after the polls.

Rebuking these allegations, Lee said the government has spent about S$10.5 billion on measures to assist the poor since 2001.

The lavish budget, which also included huge investments into research and development, is expected to drag the city-state's fiscal position to a deficit of S$2.9 billion in 2006/07 -- the biggest deficit in at least 20 years.

But Lee said the fiscal position was sustainable as the government had accrued funds from previous years.

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