Updated at 4.49pm: Economists have called on Chief Executive Tung Chee-hwa to provide clear financial leadership in next week's Policy Address but have disagreed over whether the Government should cut spending in the face of an anticipated budget deficit blowout. Calls for financial leadership from Chief Executive Tung Chee-hwa in his policy address this month have intensified in response to warnings the budget deficit could blow out to $50 billion. HSBC senior economist George Leung called for the Government to haul spending back to below 18 per cent of gross domestic product from above 20 per cent, where it has been for the past few years. ''I'm not asking them to do that this time in the budget but you've got to come up with a plan, a vision, a target or something to let Hong Kong people see the government is trying to reach the target,'' Mr Leung said. The Government's financial results for the five months of the fiscal year to August 31, released on Saturday, showed the deficit standing at $49 billion. Expenditure for the April to August period was $96 billion while revenue was $47 billion. Hong Kong's fiscal reserves stood at $381.3 billion. It is common for the Government to run a large deficit for the first nine months of the fiscal year. However, Financial Secretary Antony Leung Kam-chung warned last week that the full-year deficit could balloon to $50 billion - more than 16 times the Government's official estimate. Mr Leung said the $3 billion estimate assumed projected revenue of $28 billion from land sales, $35 million from exchange fund investments and $15 billion from the the second tranche of MTR shares, all of which were now in question. ''I think the government has to look even deeper into the government's structure and cut down public spending to cut down reliance on investment revenue,'' HSBC's Mr Leung said. The government's increasing revenue reliance on investment income could prove even move volatile than land revenue because of Hong Kong's languishing stock market. However, unlike other economic commentators, he warned against dipping into the reserves. ''I think it's a dilemma because you will never be sure whether you will get a good investment return this year or the year after, and if you cut your principal it means the investment return the year after will be reduced,'' Mr Leung said. Running down the fiscal reserve could also endanger Hong Kong's credit rating, which would affect the borrowing power of Hong Kong companies, he said. Jennifer Wong Wan How-yee, tax partner at KPMG, called for the Chief Executive to announce ''concrete recommendations for a clear and workable plan'' in his policy address. ''In the past, the government's policy address just drew a very rosy picture, and it was only a sketch. That's why businessmen are getting lost, our clients have been saying that,'' Ms Wong said. A prime example of the lack of economic leadership was the debacle over the 85,000-unit annual public housing target, which was quietly abandoned without being publicly announced, she said. However, calls for the government to dip into its fiscal reserves ignored the fact it was calculated using cash accounting standards, which did not take into account contingent liabilities such as civil service pensions, which some had estimated to be as high as $400 billion. However Ms Wong said the realisable value of government assets - everything from airports to public toilets - was in doubt. However, Ms Wong argued against dipping into the reserves, saying they did not take into account contingent liabilities such as civil service pensions, which some had estimated to be as high as $400 billion. This year the government's true financial position would become clearer because its accounts would also be presented on an accrual instead of a cash accounting basis, as in the past. ''[At present] everyone thinks the government is very rich and very mean and asks why doesn't it help its people?,'' Ms Wong said. While the requirement to ''balance the budget'' under the Basic Law did not refer to whether this was an annual, medium or long-term requirement, ''if this year is another big deficit...it means next year there will be another big hole. And when will the hole disappear?'' ING Barings economist Xen Gladstone said this was no time for the government to cut its spending. He said the government should dip into its reserves during uncertain times. The bank did not view the government's budget deficit as a serious issue over the next five years ''because the economy is down now, but it's not going to stay that way forever''. Nomura International senior economist Pu Yonghao said that while Hong Kong was unique in having no public debt, it was a concern that while revenue had remained flat, government expenditure had steadily risen from about 10 per cent of GDP in 1990.