ISLAMABAD, June 29: The Capital Development Authority (CDA) chairman Imtiaz Inayat Elahi on Wednesday said the authority would soon launch municipal bonds to generate funds for self-finance and development projects.

Talking to Dawn he said three prominent commercial banks had agreed to finance the launch of municipal bonds scheme.

“We will launch the scheme within a month for which the three banks will provide monetary assistance of Rs3 billion to the CDA against the authority's assets,” the CDA chairman said.

The banks, he said, which were interested to help launch the municipal bonds are Standard Chartered Bank, Habib Bank and United Bank.

The official said a joint committee of the three banks and officials of the CDA had evaluated the financial capacity of the authority from different angles.

Although the CDA is passing through one of the worst financial crisis, no on-going project has been stopped.

A municipal bond is issued by local government, development agencies, special-purpose districts, public utility, publicly owned airports and seaports, and any other governmental entity below the state level.

Interest income received by holders of municipal bonds is often exempted from the federal income tax and the income tax of the state in which they are issued.

The chairman said main thrust of the CDA budget would be on maintenance work, environment protection and increase in tax net.

“In the next financial year we will not go for mega development projects but concentrate on the maintenance of the existing schemes especially improvement of neglected sectors of I and G series,” the CDA chairman said.

Besides municipal bonds scheme, rapid bus service is expected to be launched in a month time, he said.

“Our main income generation source is our land,” the CDA chief said.

He said this year the budget is slightly higher than the outgoing year's budget of Rs22.7 billion. “This year's budget will be realistic one as its total outlay will not go as high as inflation and depreciation of Pakistani rupee,” Mr Elahi said.

The present year's income generation target was Rs2 billion, and increase in property tax and water charges is expected to add Rs1 billion to the revenue.

This time the federal government had already allocated over Rs2 billion under the Public Sector Development Programme (PSDP) for the authority. Rs300 million has been allocated for widening of Kashmir Highway and Rs150 million for the maintenance of IJ Principal Road.The Cabinet Division has allowed the authority to increase property tax and water charges by 80 to 90 per cent, which may go into effect from July 1.

The chairman said despite severe financial crunch, the CDA was trying to keep up the momentum of ongoing development projects and execute the others.

“We are currently executing many on-going mega projects including widening of Lehtrar Road, Zero Point Interchange, development of Sector D-12,” he said.

He said in the next year budget a sum of Rs300 million had been allocated for the construction of Charah Dam in Islamabad, which would provide some relief to the residents of Islamabad from persisting water crisis.