Ultimate magazine theme for WordPress.

Lula expected to appoint a leftist loyalist as Brazil’s finance minister

Brazilian President-elect Luiz Inácio Lula da Silva is expected to appoint Fernando Haddad, a loyalist to his left-wing Labor Party, as finance minister on Friday, according to three sources with knowledge of the matter.

Lula’s decision is likely to disappoint financial markets and reignite investor fears that his government, which takes office on January 1, will adopt looser fiscal policies.

The appointment of Haddad, a political science professor who previously served as education minister, would shatter hopes in the Brazilian business community that Lula would select a more pro-market politician to guide Latin America’s largest country through what is expected to be a bumpy year for the global economy.

A longtime ally of Lula, Haddad, 59, is a well-known socialite who is appreciated for her intellect and political propriety. However, he is viewed with suspicion by the financial elite – colloquially known as Faria Lima, after an avenue in São Paulo – who believe his focus on social justice will trump financial responsibility.

In an interview earlier this year, Haddad said the neoliberal focus of Jair Bolsonaro’s outgoing government on the free market was “unsustainable”.

“Thirty-eight percent of Brazilians only earn minimum wage. If we don’t look at that side of society, if we just look at the stock market, at the earnings, we’re going to applaud Bolsonaro,” Haddad said.

“Profits are rising and business people are supporting Bolsonaro because wages are falling, not because the economy is growing. The worker loses and the business world wins.”

Born in the largest city in Latin America, Haddad has a master’s degree in economics and a doctorate in philosophy, and has been a member of Labor Party PT since he was 20 years old. Earlier in his career, Haddad worked as an investment analyst at a bank.

Between 2005 and 2012 he was Secretary of Education, first under Lula and then under President Dilma Rousseff.

He was then elected mayor of São Paulo, but only served one term after voters rejected his bid for re-election amid a wave of anti-PT sentiment.

In 2018, he was called up to run for the presidency against Bolsonaro when Lula was jailed on corruption charges and barred from running, but lost by more than 10 million votes.

During the 2018 presidential campaign, Haddad pledged to raise the minimum wage, repeal labor reform that benefited employers over workers, and suspend privatizations—all measures dear to Lula’s heart.

In that year’s elections, he lost the race for governorship in the state of São Paulo, Brazil’s largest, by 2.5 million votes to Tarcísio de Freitas, a right-wing Bolsonaro ally.

The first challenge facing the new administration is an ongoing struggle in Parliament to pass a constitutional amendment that would allow Lula to fund his multi-billion dollar campaign pledges to boost social spending.

Thierry Larose, a portfolio manager at Swiss bank Vontobel, said he expected other key posts on Lula’s economics team to go to “market-friendly figures”.

“Some technocrats should show that they still care about financial responsibility. But priority will be given to social spending in favor of the poorest, and Keynesian-style policies are likely to prevail,” he added.

Comments are closed.