Defense expenditures, which accounted for between 25 and 38 percent of the national budget in the 1960s and 1970s, gradually decreased to less than 10 percent in the 1980s. One of the reasons government leaders chose to establish a citizen's army in the 1960s was to enable the growth of the armed forces to keep pace with the growth of the economy. The pay-as-you-go principle worked well for Singapore. In the 1960s and early 1970s, the government raised taxes in order to pay for purchases of foreign military equipment. The largest increases occurred between 1968 and 1972. Defense budgets increased from US$100 million to US$249 million during this period, with the largest part of the budget allocated for the acquisition of tanks and naval vessels.

In 1971 defense was the largest component of the budget. Defense would have been a still larger portion of the budget if Britain had not provided US$94 million in grants and US$281 million in loans as part of a compensation package for the withdrawal of its armed forces. Singapore's takeover of British military installations enabled the government to focus most of its spending on materiel, operations, and training. By 1973 when defense spending peaked at 38.9 percent of the national budget, the army was adequately equipped, and military planners began to focus more attention on the long-term needs of the armed forces, particularly the air force. In that year, military expenditures were less than 17 percent of the budget. In 1988 an estimated US$1.1 billion was spent on defense, which amounted to 7.5 percent of that year's total budget.

In response to the economic recession of 1985, the government instituted a five-year freeze on the size of the armed forces but continued to acquire new types of weapons and training equipment that were part of its ongoing modernization program. In 1986 the defense budget was reduced by US$175 million from the record high US$1.2 billion figure spent in 1985, with the cuts being apportioned throughout the armed forces. The five-year freeze did not affect national service. As new army units were formed and began their active service, other units were transferred to the reserves, and the longest serving reserve units were deactivated. The remainder of the cuts was absorbed through reduced spending on nonessential military supplies and certain types of training (see table 13, Appendix).

In the 1970s, the government established a number of education programs and increased military pay to encourage officers and NCOs to remain in the service. Officers were required to serve three years on active duty, after which most left to pursue more lucrative professions. In 1971 the government began to offer scholarships to promising officers who agreed to reenlist for at least one additional tour of duty. The Overseas Training Awards, the first such program to be implemented, enabled qualified officers to earn undergraduate and postgraduate degrees in management and other disciplines needed by the armed forces at prestigious universities and colleges in Western Euro9cb rope and the United States. Many of the officers trained through this program accepted managerial and technical positions in the civil service after they completed their military obligation. Other officers were given scholarships to the National University of Singapore, Singapore Polytechnic Institute, and other local schools. In the early 1980s, more officers and noncommissioned officers opted for longer service because of pay increases and the tighter labor market resulting from the economic downturn in the civil sector. In 1982 the salaries of 19,000 NCOs were raised an average of 26 percent at a cost to the government of US$25 million annually. Officer salaries no doubt were increased proportionally, and the government continued to increase military pay, albeit at lower levels, in subsequent years.

In 1987 the ruling People's Action Party agreed to the establish most of a parliamentary committee to review military spending and provide a forum for public debate on defense issues. Prior to that, the government had closely monitored the press and discouraged the publication of articles critical of the government's defense policies on the pretext that national security was the prerogative of the small number of government officials responsible for policy-making and budget decisions. In 1989 the committee's primary function was to review the decisions of the executive branch on defense issues and to advise the government concerning public opinion about military spending. However, the committee lacked the power to change the government's defense policy or to amend the defense budget.

Data as of December 1989