Pakistan's former finance chief takes up role as foreign minister

FILE PHOTO: Pakistan's former Finance Minister Ishaq Dar leaves after press briefing for the 2023/24 budget

ISLAMABAD (Reuters) - Pakistan's former finance minister Ishaq Dar was named on Monday as the country's foreign minister, at a time when growing economic and security challenges will dominate the nation's foreign policy.

Dar, 73, a chartered accountant and a seasoned politician, comes from Prime Minister Shehbaz Sharif's Pakistan Muslim League-Nawaz (PML-N) party, which is leading a minority government as part of a ruling coalition.

He is also a close relative of, and close aide to, PML-N chief Nawaz Sharif.

The senator is also a previous four-time finance minister, suggesting a ramped up role for economics in the nation's diplomacy as the country tries to secure another International Monetary Fund Deal and shore up external financing from foreign capitals.

“Economic diplomacy is the need of the hour for sure,” Dar told Reuters

However, even his political allies have criticised his handling of the economy in his tenure as finance minister in the last coalition set-up, which took over in April 2022 after the removal of former Prime Minister Imran Khan in a parliament vote of confidence.

Inflation spiked as high as 38% and interest rates to 22% during Dar's 16-month stint, mostly due to the IMF's policy requirements.

Dar has defended his actions, saying he had to take tough measures to avert a sovereign default by securing the IMF programme, which Khan had scuttled days before leaving his office, an accusation the former cricket-star denies.

However, under Dar, Pakistan struggled for seven months to unlock the remaining tranches of its last $6.5 billion bailout programme, and ultimately it took Shehbaz Sharif's intervention to secure a new last-ditch deal.

During that time, Dar regularly criticised the IMF on public platforms in the middle of negotiations. He is best known for favouring market intervention to prop up the Pakistani rupee - something the IMF has warned against.

In his new job, Dar will have to handle delicate relationships, including with China and Gulf countries that are key sources of financing for cash-strapped Pakistan, as well as with Washington.

He also faces prickly neighbours, including arch-rival India, which will go to the polls this year, and Taliban-led Afghanistan, which Pakistan accuses of harbouring militants who are increasing attacks on Pakistani soil. The Taliban deny that claim.

Dar will have to navigate these challenges in a minority government that will rely on the support of different parties to pass critical legislation, with alliance partner Pakistan Peoples Party saying it would support the government on an issue-to-issue basis.

In the role, he will also likely have to consider the powerful military, which has maintained a huge influence on the country's foreign policy, although it denies meddling in politics.

(Reporting by Asif Shahzad and Charlotte Greenfield; Editing by Raju Gopalakrishnan)