What is the primary purpose of a lease-purchase agreement in government practice?

The primary purpose of a lease-purchase agreement in government practice is to allow a government entity to lease a capital asset over a long-term period with the option or requirement to purchase the asset at the end of the lease term. This arrangement is beneficial for governments as it enables them to use valuable assets, such as equipment or buildings, without the immediate financial burden of a full purchase. By spreading the payments over the lease term, the government can manage its cash flow more effectively while ultimately gaining ownership of the asset. This is particularly advantageous for capital-intensive investments where upfront costs can be prohibitive.

Lease-purchase agreements also provide a way for governments to maintain flexibility in their budgeting and financial planning, with the added benefit of potentially securing lower costs over the duration of the lease.