But there’s a very different reality playing out in dozens of other countries, according to United Nations officials. They warn that soaring global debt—far above the levels after the 2008 financial crisis—risks dragging down the economies of low- and middle-income countries, cutting deep into essential services like schools, health clinics, and even water and sanitation, as the world slowly resumes normal life.

“We are in the middle of the debt crisis, but we are not seeing the effects yet,” Hamid Rashid, Director of the U.N.’s Global Economic Monitoring unit, said during a Zoom panel on Thursday organized by the U.N. Children’s Fund, or Unicef. “In order to face this pandemic, we have increased debt considerably,” said Rashid, who estimated that governments have borrowed at least an additional $10 trillion.

The warnings come ahead of the International Monetary Fund and World Bank spring meetings in Washington, beginning Monday, when governments from across the world try to thrash out how to finance the trillions needed for the post-COVID-19 recovery.

Less-wealthy countries are expected to bargain hard for debt forgiveness, or hugely generous terms for repayments, after spending billions keeping their economies afloat through the pandemic, while their revenues from industries like oil and tourism plummeted.

“Even before the pandemic we had a serious public investment problem,” said Bob Muchabaiwa, a Unicef public finance specialist in Nairobi, Kenya. “Now we’re facing twin crises: A drop in social spending and a surge in the needs on the ground,” he said. “There is very little revenue to invest.”

China and the U.S. will drive growth

Given that, there are already warnings that global recovery will look starkly different for rich and poor countries. IMF Managing Director Kristalina Georgieva told the Council on Foreign Relations on Tuesday that President Biden’s $1.9-trillion stimulus package would help drive 5.5% global GDP growth this year—higher than the organization’s previous estimate. But she said that global growth would be powered increasingly by just two countries, the U.S. and China, while many others will struggle. Poorer countries could suffer a 20% economic downturn this year.  “Economic fortunes are diverging,” she said. “Too many countries are falling behind.”

That fact is already obvious. Take Zambia, which officials portray as a perfect illustration of a country overwhelmed by permanent debt. The small central African nation of just 18 million people sits atop one of the richest mineral veins on the planet, with about 6% of global copper reserves. Yet this year it defaulted on its debt, and has cut its school budget by nearly one-half during the pandemic, in order to try make ends meet, according to a Unicef report this week on the debt crisis.

More than simply honoring its debts, Zambia—like many other countries—face ever-increasing obligations on high interest rates, making it almost impossible for them ever to pay back the principal loans. That includes debt-service payments of about $537.75 million to Chinese banks, according to Unicef, and $3 billion in Eurobonds. Since it has failed to pay its creditors, Zambia “may be subjected to higher sovereign borrowing costs in its future transactions,” says the Unicef report.

Zambia is not alone. Unicef says the east African country of South Sudan spent 11 times more on servicing its debt than on education, health, and social services combined, and Haiti, Gambia and Chad spent three times more. And in February, the Institute of International Finance in Washington estimated that global debt was about $281 trillion in 2020—the highest amount ever. That figure is about 355% of worldwide GDP, it says.

Increasingly, governments are turning to institutions like the IMF and World Bank, in order to pay back commercial banks—which have profited well on the loans. “They are borrowing from official sources, to service debt to private creditors,” Rashid, the U.N.’s economic monitoring chief, said on Thursday’s Zoom call. “Private creditors know they will be paid back no matter what.” He called it “a moral hazard question.”

Fixing all this will not be easy during next week’s IMF and World Bank meetings—especially since financial institutions have resisted any significant changes.

“We don’t seem to have learned from history on this question,” said Joanne Bosworth, Unicef’s chief of public finance and local governance, on the Zoom call. “At the moment what seems to be on offer is largely short-term piecemeal solutions only open to limited number of countries.”

She believes each government should ring-fence social services and education, protecting them from budget cuts, and that rich countries should dedicate one percent of their pandemic stimulus funds to investing in poor countries’ recovery. “That would raise billions,” she said.

The IMF last year announced $100Bn in lending and another $500m in debt service grants. But that might only make a slight dent in the mountain of money countries owe.