Economists and international credit ratings agencies are sceptical about proposals by lawmakers for the government to abandon its target of balancing the books by 2006-07 and to sell bonds to finance Hong Kong's burgeoning deficit. Legislators yesterday said factors such as the economic turmoil caused by the Sars outbreak and the resignation of former financial secretary Antony Leung Kam-chung make the target unattainable. Instead, the government should work harder to control spending. But analysts say they are looking past that goal to see whether the government has an effective strategy to reduce the deficit. 'That [goal] has always looked optimistic anyway,' said Brian Coulton, senior director of Asia sovereign ratings at Fitch Ratings. 'The real need in Hong Kong is for a credible medium-term strategy to stabilise fiscal reserves. 'Were [the government] to abandon this target altogether, that would raise question marks as to whether or not they were willing to take the measures necessary over the next few years,' Mr Coulton added. Mr Leung, who resigned last week, promised in his budget speech to erase the deficit by 2006-07, a goal timed to coincide with the arrival of a new chief executive. The deficit hit $62 billion last year and is officially forecast to reach $68 billion this year. Analysts forecast it will climb as high as $100 billion. Legislators have also proposed selling government bonds, but gave no details such as how much money could be raised, or the interest paid. Mr Coulton said such a sale would not affect the assessment of Hong Kong's financial position. Compared to other financial centres such as New York and London, Hong Kong does not have much of a bond market but Mr Coulton said a bond sale could help jump-start the creation of one. Another benefit would be the establishment of a benchmark interest rate. Other economists are more doubtful about bond sales. The main problem with raising money to plug a gaping deficit is that it will have to be repaid eventually with interest. Arguments for a bond sale overlooked the real problem of high government spending, said Kevin Lai, an economist at National Australia Bank. 'Why should we be raising more revenue to keep this overspending going on and on?' Mr Lai asked. 'We're talking about an ... overweight kid. The last thing we should be doing is to keep feeding him chocolate. We should take him for exercise,' he added. Selling bonds could also be costly for the Hong Kong government, said Jim Walker, chief economist at CLSA Emerging Markets. Interest rates are usually determined by the level of confidence the market has that an issuer will pay back the principal on maturity. That could be a problem for Hong Kong, given the poor state of its economy, he said. Any borrowing could prove expensive.