Lula appoints a Labor loyalist as Brazil’s new finance minister

Brazilian President-elect Luiz Inacio Lula da Silva on Friday appointed Fernando Haddad, loyal to his left-wing Workers’ Party, as finance minister, sparking investor fears that the new administration is ready to pursue a more flexible fiscal policy.

The appointment of Haddad, a professor of political science who previously served as Minister of Education, shattered hopes among the people BrazilIn Lula’s business community, Lula will choose a more market-friendly politician to guide Latin America’s largest country through what is expected to be a bumpy few years for the global economy.

“The selection of Haddad, who is a politician, shows that Lula sees negotiating with Congress as more important than crafting economic reforms,” ​​said Adriano Laureno, of the political consultancy Prospectiva.

Smith He is a longtime ally of the president-elect and some are likely to be his preferred successor. He is known for his intelligence and political decency. However, he is viewed warily by the financial elite—known colloquially as Faria Lima, after a road in São Paulo—who believe his focus on social justice will trump fiscal responsibility.

In an interview earlier this year, Haddad said the focus on neoliberalism and the free market of the outgoing administration of Jair Bolsonaro was “unsustainable.”

“Thirty-eight percent of Brazilians earn only the minimum wage. If we don’t look at this side of society, if we only look at the stock market, earnings, we will salute Bolsonaro,” Haddad said during the interview.

Haddad was born in São PauloAnd the He has an MA in Economics and a PhD in Philosophy, and has been a member of the Labor Party (PT) since he was twenty. Earlier in his career, he worked as an investment analyst in a bank.

Between 2005 and 2012And the He served as Minister of Education, first under Lula and then Dilma Rousseff. He was then elected mayor of São Paulo, but only served one term after voters rejected his re-election bid amid a wave of anti-Workers’ party sentiment.

In 2018, it was He was drafted to run for the presidency against Bolsonaro when Lula was imprisoned on corruption charges and barred from running. He lost by more than 10 million votes.

During the presidential election campaign at the time, Haddad pledged to increase the minimum wage, repeal labor reform that benefited employers at the expense of workers and suspend privatization — all policies close to Lula’s heart.

In this year’s elections, he lost the race for governor of Sao Paulo, Brazil’s largest state, to Tarcisio de Freitas, a right-wing ally of Bolsonaro, by 2.5 million votes.

The first challenge facing the new administration is the ongoing battle in parliament to pass a constitutional amendment that would allow Lula to fund his campaign promises to increase social spending.

The amendment seeks to raise the country’s mandatory spending cap by R$145 billion (US$28 billion) to make room for keeping the country’s flagship social welfare grant, the Bolsa Família, at R$600 per month. The increase will be valid for two years.

The move alarmed some investors and economists, who feared the new government would abandon fiscal discipline.

Thierry Larose, a portfolio manager at Swiss bank Vontobel, said he expects other important positions in Lula’s economic team to be given to “market-friendly personalities”.

Some technocrats must show they still care about fiscal responsibility. But priority will be given to social spending in favor of the poorest policies and Keynesian-style policies are likely to prevail.”

Andre Perfetto, chief economist at brokerage Nekton, said Haddad’s selection indicated Lula would not conduct any major economic experiments. “Lola’s desire to make public Haddad, his immediate successor in the 2026 elections,” Perfetto said. “Lula will not take too many risks on the economic agenda.”

On Friday, Lula announced that Flavio Dino, a senator-elect from the northeastern state of Maranhao, would be justice minister. Diplomat Mauro Vieira will become Minister of Foreign Affairs. Jose Museo Montero, former president of the Federal Court of Accounts, will take over the defense portfolio.