What is the primary purpose of bond issuance?

The primary purpose of bond issuance is to raise capital for public projects. Municipalities often issue bonds to finance infrastructure improvements such as roads, schools, bridges, and public facilities. By issuing bonds, governments can obtain immediate funding from investors, which can then be used to undertake large projects that may not be feasible through regular budget allocations alone. This method allows local governments to spread the cost of these projects over time, as they can repay the bonds with interest through future revenues or taxes generated from the increased public services and improvements.

When evaluating the context of the other choices, consolidating existing debts typically refers to refinancing or managing previously issued debt rather than financing new projects. Reducing the tax burden on residents contradicts the primary function of bond issuance, as issuance generally involves increasing future liabilities. Lastly, increasing government revenue without capital expenditure may suggest enhancing operational efficiency or cost-saving measures rather than leveraging bond finance for defined capital improvements. Thus, the aim of raising capital for public projects is distinctly central to bond issuance.