The Singapore Government has fleshed out a proposal to hand out S$2.7 billion (about HK$11.6 billion) from its coffers to poorer citizens in the form of 'New Singapore Shares'. The scheme formed part of the government's S$11.3 billion package of off-budget measures, announced last week, designed to blunt the impact of the worst recession to hit the city-state since the mid 1960s. Finance Minister Richard Hu Tsu Tau said yesterday that up to half of the bond-like shares may be exchanged for cash immediately. But if retained, the shares would pay an annual dividend of 3 per cent, plus an extra pay-out equivalent to the preceding year's economic growth rate, if positive. The scheme was first announced by Prime Minister Goh Chok Tong in August. It was confirmed when Deputy Prime Minister Lee Hsien Loong detailed the off-budget package to Parliament last Wednesday. The distribution of the shares, which may be fully redeemed from November next year, will start from next month. 'The New Singapore Shares scheme was conceived by Mr Goh as a new way of sharing Singapore's success with our citizens,' Mr Hu said. 'Part of the shares [may] be withdrawn in cash almost immediately. 'This is especially useful for persons who need some cash during this difficult period.' Thousands of Singaporeans have been laid off this year as the trade-reliant city-state feels the impact of the rapid cooling of the world's largest economies, especially the slump in demand for high-technology goods. The government has estimated the jobless rate among residents reached 4 per cent last month and would rise to at least 4.5 per cent by December. With no recovery forecast until well into next year, officials have conceded unemployment was likely to approach 5 per cent. Mr Hu said the distribution of the shares would be means-tested, with the bulk being handed to lower-income families. Those above the retirement age of 62 and those who have completed national service in the armed forces would receive an extra pay-out, he said. The Finance Ministry said the poorest would receive 1,400 shares per person, each worth S$1. At the top of the scale, the richest adults would get 200 shares a head, with intermediate categories receiving 1,000, 600 or 400 shares per person. The scheme runs until 2007, when any shares still held by citizens will be repurchased by the government at their face value. The cash pool for the hand-out is the budget surpluses accumulated over the lifetime of the present administration, which took office in 1997. Prudent budgeting and healthy economic growth have swollen the government's finances. Before the start of the current financial year, the administration had saved in excess of S$10 billion more than it spent. Under Singapore law, any budget surpluses must be handed over to the Monetary Authority of Singapore when the government leaves office. The de facto central bank would then add them to the foreign-exchange holdings. Mr Goh must call a national election by August next year. But commentators have suggested he may opt for a poll long before then, with the ground 'sweetened' by the off-budget moves, including the shares scheme. Singapore's economy was on course for its worst full-year performance since 1964. After shrinking 5.4 per cent in the third quarter, the government now expects gross domestic product to contract by 3 per cent this year. For next year it has forecast a range of 2 per cent to minus 2 per cent, centred on zero growth.