Read the passage given below carefully:
In recent decades, municipal bond markets have been championed as a vital instrument for bridging the immense urban infrastructure financing gap in developing nations. Proponents argue that sub-national debt issuance empowers local governments to fund long-term capital projects, such as sanitation networks and public transit, without relying exclusively on central fiscal transfers. However, a closer examination reveals that the financial viability of municipal bonds is severely constrained by structural deficiencies in local revenue administration. Most municipalities in low- and middle-income countries suffer from outdated property tax registries, sub-optimal user-fee collection mechanisms, and weak financial auditing standards. Consequently, issuing bonds without first strengthening municipal balance sheets merely shifts fiscal risk onto local public utilities or leads to high debt-servicing costs that swallow local developmental budgets. Furthermore, institutional investors remain hesitant to underwrite municipal paper in the absence of robust credit rating frameworks and explicit sovereign guarantees. Therefore, while market-based debt instruments offer a promising avenue for capital accumulation, municipal financial autonomy cannot precede comprehensive administrative reform of sub-national fiscal mechanisms. Sustainable infrastructure financing requires prioritizing internal revenue mobilization, institutional transparency, and creditworthiness before scaling public debt issuance.
Which one of the following statements best reflects the central theme of the passage?
- Expanding municipal bond markets to finance urban infrastructure necessitates prior internal revenue reforms and institutional strengthening at the local level.Cevap
- BOutdated property tax registries and inefficient user-fee collection systems are the sole causes of fiscal deficits in developing world municipalities.
- CMarket-based debt instruments such as municipal bonds are fundamentally unsuitable for developing nations and should be completely replaced by central government grants.
- DSub-national bond issuances in emerging economies fail primarily because foreign portfolio investors demand higher yields due to global interest rate volatility.