The article, in the May 6 edition of the influential regional magazine, also accused the ruling People's Action Party of maintaining huge, largely hidden budget surpluses that helped keep it in power but weakened the economy. "Only a government dominated by a single party could consistently post such large surpluses and only an extraordinarily well-financed state could exert such extensive control over political and economic life," the article said.

The article, written by staff reporter Dan Fineman, said the "austere fiscal policies hurt Singapore more than possibly any country on the planet".

In response, Deputy Prime Minister Lee Hsien Loong's press secretary, Francis Chong, wrote a letter to the magazine's editor denying the points raised in the article and questioning the motives for publishing it.

"These factual inaccuracies and willful distortions raise the question whether FEER published the article to improve Singapore's public finances, or to shake confidence in the Singapore government and system," Chong said.

Chong said Singapore's total taxes were only 16 percent of gross domestic product and highlighted the city-state's status as one of the most economically competitive nations in the world with a high standard of living.

The article comes at a sensitive time for the People's Action Party as it goes through the process of installing Lee, who is also finance minister, as prime minister this year.

Current Prime Minister Goh Chok Tong is expected to stand down in the next few months after 14 years as the nation's leader.

The party has ruled Singapore since its independence in 1965 and has engineered a political system that has allowed it to remain in power with overwhelming parliamentary majorities.

The country's domestic media are instructed to report in the "national interests" while foreign press are ordered not to "interfere" in Singapore's domestic politics.

The government released the letter to the foreign press on Thursday, a day after giving it to the local media.

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