The defence outlay accounts for 31.2 percent of the $29.68-billion national budget for the fiscal year ending March 2006 that Prime Minister and Finance Minister Lee Hsien Loong unveiled before parliament.

The defence ministry has the biggest share of spending among all government ministries and the 7.4 percent increase was well above the 1.6 percent-rise in the overall expenditure.

Together with the home affairs ministry and the ministry of foreign affairs, security and external relations accounts for 40.1 percent, or $11.90 billion, of the proposed national budget.

The education ministry has the next biggest share of the budget with 20 percent.

Budget papers released to the media said a bulk of the defence ministry's operating expenditure will go to salaries and allowances for service personnel, maintenance of equipment and camps, and the purchase of  military equipment.

Lee also announced a 3 percent budget cut for all ministries except defence, on top of a 2 percent cut announced in last year's budget which defence was also excluded from.

The ministries' overall expenditure will still increase marginally because their budgets are a percentage of gross domestic product, which grew by 8.4 percent in the 2004 calendar year.

Singapore, a tiny Southeast Asian island-nation surrounded by bigger neighbours, already has one of Asia's best equipped land, sea and air forces, and defence has traditionally soaked up more of the budget than other ministries.

Apart from a modern, high-tech army, the Singapore Armed Forces also has four submarines, a fleet of transport helicopters and planes, landing ships, tanks and warships.

The government is expected to announce this year its choice of modern fighter jets to replace a squadron of its ageing Skyhawk planes in a deal worth around US$1 billion.

The Singapore Armed Forces' transport capabilities were put to heavy use for humanitarian relief in neighbouring Indonesia after the December 26 tsunami disaster, in the city-state's biggest military deployment since independence.

According to the budget statement, the defence ministry's mission is to "enhance Singapore's peace and security, and should deterrence and diplomacy fail, to secure a swift and decisive victory" over any aggressor.

The budget also includes financing for enhanced security measures carried out by the home affairs ministry to deter terrorist attacks.

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