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SINGAPORE (Reuters) - More than 100 people gathered in Singapore's Speakers' Corner on Saturday for a rare protest against a government plan to hike water prices that has stirred discontent over sluggish economic growth and rising unemployment in the city-state.

Singapore's government enjoys strong popular support but is also known for having little tolerance for dissent. Residents are only allowed to air their grievances in a small downtown park if they comply with defamation laws and avoid fanning ethnic and religious tensions.

The police said in a statement on Sunday that the Reuters report "presented a false and misleading picture on the use of Speakers' Corner in Singapore."

"A more objective reporting would have shown that the Speakers’ Corner has been and remains an avenue for Singaporeans to participate freely and responsibly in public speeches and demonstrations," it said.

Responding to the police statement, a Reuters spokesperson said on Sunday: "We stand by our story."

Although laying out a much more generous budget than expected, the government last month announced a two-step, 30 percent increase in water prices, sweetening it with tax rebates to help lower-income households pay their bills.

It will be the first increase in water prices for nearly two decades, but some Singaporeans say rebates proposed by the government will not be enough.

"If they give us more rebate but increase the prices, it's still the same. For a big family, you need to use a lot of water," said Afad, 28, a delivery worker with three children. He said he earned less than S$2,000 (about $1,415) per month and was expecting another child.

The resource-scarce city-state gets up to 60 percent of its water supplies from Malaysia as part of an agreement that expires in 2061.

Singapore also recycles used water with advanced membrane technologies and ultra-violet disinfection and has invested heavily in sea water desalination as it seeks to reduce its reliance on imports.

"Every additional drop of water has to come from these two sources," Finance Minister Heng Swee Keat told parliament last month.

He said the price rises were due to the higher costs of water purifying technologies as both imports and local catchment "depend heavily on weather conditions".

But protesters call the move "unjustified", saying living costs are already too high in Singapore, which has been rated the world's most expensive city for three consecutive years, according to the Economist Intelligence Unit.

The city-state's economy, which has grown at a break-neck pace since independence, is locked in a protracted period of slow growth and unemployment has hit a six-year high.

The organisers of Saturday's protest said more people would have turned up if they had not feared a police crackdown.

In 2014, six people were charged with creating a public nuisance while protesting against a compulsory tax savings scheme.

The police said that the six people involved in that incident were charged after disrupting another event being held on an adjacent lawn. ($1=1.4194 Singapore dollars)

(Reporting by Singapore bureau; Editing by Neil Fullick)

Reuters