The world’s finance ministers and central bankers will be in Washington this week for the annual meetings of the International Monetary Fund and World Bank amid growing concerns that the global economy is heading towards stagnation.

Predictions of a sharp downturn fill policymakers with anxiety, knowing that job losses and lower tax revenues can only lead to social unrest. Last week the IMF’s new leader, Kristalina Georgieva, asked nations involved in tit-for-tat trade wars if they dare ignore warnings of the most serious threat to the global economy since the financial crisis.

However, her agenda goes beyond the short-term difficulties posed by a downturn. Beginning her five-year tenure as managing director and chairwoman of the IMF’s executive board, she said the organisation’s long-term objectives included “dealing with issues like inequalities, climate risks and rapid technological change.”

Georgieva, previously number two at the World Bank and a Bulgarian national, is known for her commitment to tackling the climate crisis after starting work in academia lecturing on development issues before securing a post at the World Bank as an environmental economist.

The 66-year-old rose through the ranks to become vice-president and corporate secretary before in 2010 accepting the nomination of the Bulgarian government to be an EU commissioner. She was responsible for humanitarian aid and crisis management before a second term in 2014 as commissioner for international cooperation and development.

As the IMF celebrates its 75th anniversary, finding a way to ally policies to tackle climate change with plans for broad-based GDP growth in the developing world while also closing inequality gaps is not going to be easy.

Privately, Georgieva has said the IMF is playing catch-up after years when it paid lip service to environmental concerns. It focused on economic growth based on free and open trade and not much more. The bread-and-butter business of providing loans to indebted countries is commonly tied to labour reforms and privatisations that benefit owners over workers.

Kenneth Rogoff, the IMF’s chief economist from 2001 to 2003, said: “The organisation is funded as a lending agency and not an aid agency, a simple fact that many [anti-poverty campaigners] do not seem to understand. Moreover, unlike the World Bank, which makes long-term subsidised development loans, the IMF is the one tasked with helping countries hit by financial crises regain access to private credit markets.”

Rogoff said the IMF would need to retain its tough stance when it offered loans, arguing that Georgieva would be better advised to find other agencies to increase aid to indebted countries.

This week Georgieva will lead discussions on how to implement huge rises in carbon taxes, including on the consumption of petrol, diesel, oil and gas. This policy lacks a road map for governments that shows how they move away from an economy dependent on carbon to one that is almost carbon-free, according to critics of the bank.

In the first major discussion paper since Georgieva’s arrival, the IMF said global heating would require governments around the world to impose stringent taxes on fossil-fuel usage that would mean a 43% jump in household energy bills over the next decade.

Ecuador is the latest country to raise the duty on domestic fuel and petrol only to be met with angry protests. Fuel subsidy cuts, announced of part of a $4.2bn austerity plan with the IMF, triggered days of riots, forcing the government to leave the capital, Quito.

Economist Brunello Rosa, co-founder, with New York-based economist Nouriel Roubini, of Rosa & Roubini Associates, an independent consultancy firm, said Georgieva would find rises in fuel duty to cut carbon emissions would prove difficult.

“It is not just going to be Ecuador where we see riots. This started in France with the gilets jaunes [yellow vest protesters]. When you think that France is a country with one of the highest standards of living in the world and yet a small rise in fuel duty brought riots to Paris’s streets, you know this is going to be a tough problem to crack,” said Rosa.

If the IMF is to tackle inequality, Georgieva will need to turn the steering wheel almost as hard as she must on the environment. For some time the IMF has come under fire for only helping countries hit by natural disasters with loans they can ill-afford to pay back. The charity Jubilee Debt 2000, which campaigns against austerity and in favour of debt forgiveness for poor countries, says Georgieva should review IMF support for countries devastated by typhoons, tsunami’s and earthquakes.

Mozambique was dealing with a $2bn loans scandal and a persistent government deficit when it suffered huge damage from Cyclone Idai. The IMF has provided more than $100m in short-term loans that will be almost impossible to pay back without crippling public services or the recovery effort, say campaigners.

Georgieva, who studied at the Karl Marx Institute of Economics in Sofia, must also work to show the IMF is more inclusive. The Nobel prizewinning economist and former World Bank chief economist Joseph Stiglitz has criticised its dominance by finance ministers and central bank governors. He argues that a “Washington consensus” has emerged over decades that promotes “stabilisation, liberalisation, and privatisation” at the expense of workers’ rights and inequality.

He says labour leaders and other representative bodies should be part of the decision-making. A longstanding problem has been the dominance of US officials and the exclusion of developing countries, which now account for a larger proportion of trade and GDP growth. They are also in the frontline in dealing with the effects of rising temperatures.

Outdated voting rights mean the US and Europe dominate. Rosa said: “Reform of the way countries are represented at the IMF [the so called quotas] is not on the agenda at this year’s meetings, but Georgieva needs to make sure emerging markets, and in particular China, are more included in discussions and voting because the organisation needs to be seen as more representative.”

Loans at a price

In the wake of the second world war, there was a clamour to put the age of empire and warring nations in the past, and focus on promote balanced growth.

The British backed the Keynes plan, put forward by the economist John Maynard Keynes. It included measures to intervene when countries became overly indebted or created surpluses that distorted the financial system. The US, at the time sitting on huge surpluses, preferred its own White plan, which offered support only to indebted countries.

The White plan won. An international conference was held at Bretton Woods, in New Hampshire in the US, in July 1944 with representatives from 44 countries. As a result, the International Monetary Fund came into being in 1947 alongside its sister organisation, the World Bank.

In the early years, harking back to the 1930s and the problems caused by countries tying their currencies to a gold standard, most of the focus was on providing the funds to maintain stable and fixed currencies.

But it has been criticised over the past 40 years for the austerity measures imposed as the price of its loans – especially in Ireland, Portugal and Greece following the 2008 financial crisis – at the expense of workers’ rights, the environment and inequality.