Brazil’s President-elect Luiz Inácio Lula da Silva on Friday named Fernando Haddad, a loyalist of his left-wing Workers’ Party, as finance minister, reigniting investor fears that the new administration is willing to continue a more lax fiscal policy.
The appointment of Haddad, a political science professor who previously served as education minister, dashed hopes among BrazilLula’s business community would elect 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 election of Haddad, a politician, shows that Lula sees the negotiation with Congress as more critical than the formulation of economic reforms,” said Adriano Laureno of the Prospectiva political consultancy.
haddled he is a longtime ally of the president-elect and is considered by some to be his preferred successor. He is well known for his intellect and political decorum. Yet he is viewed with caution by the financial elite, known colloquially as Faria Lima, along an avenue in São Paulo, who believe his focus on social justice will trump fiscal responsibility.
In an interview earlier this year, Haddad said the neoliberal, free-market approach of the outgoing Jair Bolsonaro government 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, the earnings, we will applaud Bolsonaro,” Haddad said during the interview.
Haddad was born in Sao Paulo., he has a master’s degree in economics and a doctorate in philosophy, and has been a member of the Workers’ Party (PT) since he was 20 years old. Earlier in her professional career, she worked as an investment analyst at a bank.
Between 2005 and 2012, he served as Minister of Education, first with Lula and then with Dilma Rousseff. He was later elected mayor of São Paulo, but served only one term after voters rejected his re-election bid amid a wave of anti-PT sentiment.
In 2018, it was drafted to run for president against Bolsonaro when Lula was jailed on corruption charges and barred from running. He lost by more than 10 million votes.
In the presidential campaign at the time, Haddad pledged to raise the minimum wage, repeal a labor reform that favored employers over workers, and suspend privatizations, all policies close to Lula’s heart.
In this year’s election, he lost the gubernatorial race in Brazil’s largest state of São Paulo to Tarcísio de Freitas, a right-wing Bolsonaro ally, by 2.5 million votes.
The first challenge facing the new administration is an ongoing battle in parliament to pass a constitutional amendment that would allow Lula to finance his campaign promises to boost social spending.
The amendment seeks to increase the country’s mandatory spending cap by R$145bn (US$28bn) to make room to keep the country’s main Bolsa Família social welfare subsidy at R$600 a month. The increase would be valid for two years.
The move has puzzled some investors and economists, who fear the new government will abandon fiscal discipline.
Thierry Larose, portfolio manager at Swiss bank Vontobel, said he hoped other crucial posts in Lula’s economic team would go to “market-friendly personalities.”
“Some technocrats should show they still care about fiscal responsibility. But priority will be given to social spending in favor of the poorest and Keynesian-style policies are likely to prevail,” he added.
André Perfeito, chief economist at brokerage Necton, said Haddad’s choice suggested that Lula would not carry out any major economic experiments. “Lula’s desire to make Haddad her direct successor in the 2026 elections is public,” Perfeito said. “Lula will not risk more than necessary on the economic agenda.”
On Friday, Lula announced that Flávio Dino, a senator-elect from the northeastern state of Maranhão, would be justice minister; the diplomat Mauro Vieira would be chancellor; and José Múcio Monteiro, former president of the Federal Court of Accounts, would assume the defense portfolio.
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