HE is the most confident finance minister I have seen since Shaukat Tarin, but lately Mr Ishaq Dar has lost some of that poise in his stride. Since the new prime minister came, the entire balance of power within the cabinet has changed. Mr Dar appears to have been relegated to a smaller corner, and from here on will have to shout to be heard.

Known for his quick temper and tendency to take charge of every detail under his command, the finance minister, it would appear, has to now juggle his act without the backing that he enjoyed while Nawaz Sharif was prime minister. And the act is a rather complex one. The minister has to use the force of his personality to prevent the outbreak of a speculative frenzy in the exchange rate and keep revenues coming and the power sector adequately furnished with liquidity to keep chugging. It might not seem like a big issue at the moment, given the noise in the system from the recent political event, but we’ll let things roll the way they do here and find out.

For example, some of the consequences are deeply personal. Many in the cabinet, and the party, had grown resentful of the finance minister due to his overbearing style, and the enormous clout he wielded while Nawaz Sharif was prime minister. This role went far beyond economic. Many of the 35 or so committees that he chaired (nobody seems to have an accurate count of how many there actually were) had everything to do with politics and little with finance.

Economic management is passing out of Ishaq Dar’s hands into those of the new prime minister.

But now economic management is passing out of his hands into those of the new prime minister, who also happens to be from an economic background. More pointedly, there are likely to be residual differences between the two men that could find their way into public view given the nature of the working relationship they need to build with each other, and the challenges that lie ahead.

Remember the petrol crisis of January 2015? In large measure, it owed itself to economic weaknesses, not to the supply chain. Yet the fall for that event was taken by the minister petroleum, who appeared night after night on almost every TV talk show trying to advance the line that a ‘spike in demand’ led to the whole affair. Of course, for the general public it was forgotten the moment the pumps reopened, but surely the experience of taking the entire fall for what was only partially the fault of his department would leave an unpleasant memory in the mind of the then minister petroleum, who is today the prime minister.

But beyond the bad memories, and whatever personal animus that may exist in the minds of those around him, the finance minister now has to deal with the fact that a new prime minister and a new cabinet have other priorities, and are in a position to pursue them while his space to restrict their access to the state’s purse is limited.

How might this impact the conduct of policy? We saw one example when a hurried tax refund for traders and industrialists was arranged in the 48 hours leading up to the GT Road march. The amount involved in that payout was Rs26 billion, not enough to break the bank but certainly large enough to register on the fiscal calculus. Now couple this with an overly optimistic revenue collection target and an unrealistically restrained current expenditures target set in the last budget, and keeping the fiscal framework in check is going to be a supremely challenging job this year. The revenue effort will require a continuous push from Q block, but how far that will be forthcoming is now an open question.

Same holds for the exchange rate, where the dangers are far more pronounced. The rupee is under increasing pressure, likely to rise as the fiscal year wears on. Thus far it has taken personal interest from the finance minister to keep the rate steady where it is, and it is becoming increasingly clear that it is overvalued. That personal interest briefly became visible on the day the currency plunged, only to regain much of its ground once Mr Dar shouted at the bank heads. But will his diminished role allow for such continuous involvement, especially considering that pressures are likely to increase and a point will arrive when depleting reserves can spark speculation and capital flight that even the hardiest of them find hard to control?

The new prime minister has made clear that his priority is to gun ahead with the projects and get them finished before the government’s term ends, so that they can put some real megawatts behind their campaign line that they have eliminated load-shedding. Making sure the funds to do so are available on demand will be Mr Dar’s job, and soon he is likely to see himself performing the same role that every finance minister has always performed: arranging funds for his political masters, and serving as an interlocutor between them and their creditors.

Of course, this scenario could undergo one more change if Kulsum Nawaz enters the field and is elevated to prime minister. Dar’s family links with the Sharif clan will assert themselves one more time, and it is possible that he will then return to the position he has grown accustomed to, where some have described him as deputy prime minister.

However it works out, a turnover of this sort in the final fiscal year of a government cannot be a reassuring sight. The scale of the challenges growing within the economy is certainly not diminishing, even if the political capital of those tasked with ensuring that a full blown crisis does not break out is. Mr Dar’s job description just got a little more complicated, and finding continuity through the maze of changes he is facing could be the thread that sees him through till elections.

The writer is a member of staff.

khurram.husain@gmail.com

Twitter: @khurramhusain

Published in Dawn, August 17th, 2017