What is the primary purpose of debt issuance?

The primary purpose of debt issuance is to raise funds through borrowing. When municipalities or governments issue debt, they are essentially taking a loan from investors with the promise to pay back that loan with interest over a specified period. This process allows local governments to finance various public projects, such as infrastructure development, schools, roads, and other facilities that benefit the community.

Issuing debt enables municipalities to access capital without immediately raising taxes or using existing cash reserves, allowing for larger projects to be undertaken that may require significant funding beyond what could be provided through annual budgets alone. This method of financing is crucial for managing the cash flow needs of municipalities and ensuring that they can invest in long-term capital improvements while spreading the cost over the duration of the debt.

While options may reflect other financial considerations or actions related to debt management, they do not align with the primary function of debt issuance as effectively as the correct answer does.