The paper develops an analytical method and metric for evaluating the extent to which a nation’s budget support commercial debt is necessitated by the obligation to repay concessional project loans of the past. This is dubbed as the Peter-Paul dynamic. 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.