Borrowing from Peter to Pay Paul: Measuring the Commercial Debt Burden Created by Concessional Debt

Nishan de Mel and Raj Prabu Rajakulendran ()
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Nishan de Mel: Verité Research
Raj Prabu Rajakulendran: Verité Research

Development, 2024, vol. 67, issue 3, 167-177

Abstract: Abstract This article develops an analytical method and metric for evaluating the extent to which a nation’s budget support commercial debt is increased by the obligation to repay concessional project loans of the past. This is dubbed as the Peter-Paul problem. Applying it to the case of Sri Lanka and global experiences provides two kinds of insights: the hidden possibility and sources of designated project loans driving a national debt crisis, and key considerations for multilateral practices in lending to and graduating countries from concessional debt.

Keywords: Debt restructuring; Debt sustainability; Concessional financing; Sovereign bonds; Debt dynamics; Debt crisis; Sri Lanka (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41301-025-00433-x

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