Singapore will increase its defence budget by 4.3 percent over last year, data in the government's annual budget released Friday showed.

The Ministry of Defence's total expenditure in the financial year 2012 "is projected to be Sg$12.28 billion ($9.74 billion)", the budget report said.

This represented an increase of Sg$504 million or 4.3 percent over the previous year, it added.

The defence expenditure will constitute 24.4 percent of the government's total spending for 2012, making the ministry the biggest beneficiary of the budget allocation.

Most of the money will be spent on "the purchase of military equipment, maintenance of equipment and camps, and the salaries and allowances" of soldiers, the budget report stated.

Singapore's gross domestic product reached Sg$326.8 billion in 2011, with defence spending forming 3.6 percent of it.

The city-state's defence budget is expected to hit $12.32 billion by 2015, global research group IHS forecast earlier in the week.

"States like Singapore, have a strong current account and currency, and very sound public finances, so its defence spend looks stable in the near term," said Rajiv Biswas, Asia Pacific chief economist at IHS Global Insight.

Singapore has the biggest defence budget in Southeast Asia and the seventh largest in Asia, according to IHS.