REACTION The Government's change of position on a budget deficit and on the land sales programme had damaged its credibility, Democrat Lee Wing-tat said. 'How can they assure the international community of their pledges to maintain the fixed exchange rate if they easily change their mind?' he asked. Officials had previously been reluctant to adopt a budget deficit. Chief Executive Tung Chee-hwa said on June 10 that a budget deficit would lead to fresh attacks on the Hong Kong dollar and push up interest rates. Under pressure from newly elected legislators, Mr Tung twice rejected calls to cut taxes and increase spending. He warned that a budget deficit would also give rise to doubts about the Government's ability to defend the peg. 'When we go out of our way to make a budget deficit, we have to consider the atmosphere in the outside markets,' he said. International speculators would interpret the deficit as a signal the Government could not defend the peg. Financial Secretary Donald Tsang Yam-kuen had said a budget deficit would breach long-established financial principles. Only last Wednesday, Mr Tsang said there was no plan to change the land disposal programme. 'We have a land disposal programme. We have no plan to change it.'