Brazil’s president-elect Luiz Inácio Lula da Silva is expected to name Fernando Haddad, a loyalist from his leftwing Workers’ party, as finance minister on Friday, according to three sources with knowledge of the matter.
The decision by Lula is likely to disappoint financial markets and reignite investor fears that his administration, which takes office on January 1, will pursue a looser fiscal policy.
The appointment of Haddad, a political-science professor who previously served as minister of education, would dash hopes among Brazil’s business community that Lula would pick a more market-friendly politician to steer Latin America’s largest country through what is expected to be a bumpy few years for the global economy.
A longtime ally of Lula, Haddad, 59, is a well-known public figure, regarded for his intellect and political decorum. He is, however, viewed warily by the financial elite — known colloquially as Faria Lima, after 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 focus of the outgoing administration of Jair Bolsonaro was “unsustainable”.
“Thirty-eight per cent 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, at profits, we will applaud Bolsonaro,” said Haddad.
“Profits are rising, and business people are supporting Bolsonaro, because wages are falling, not because the economy is growing. The worker is losing and the business community is winning.”
Born in Latin America’s largest city, Haddad holds a masters in economics and a doctorate in philosophy and has been a member of the Workers’ party, or PT, since he was 20. Earlier in his professional career, Haddad worked as an investment analyst at a bank.
Between 2005-12 he served as minister of education, first under Lula and then president Dilma Rousseff.
He was then elected mayor of São Paulo, but served only one term after voters rejected his bid for re-election amid a wave of anti-PT sentiment.
In 2018, he was drafted to stand for the presidency against Bolsonaro when Lula was imprisoned on corruption charges and barred from running, but lost by more than 10mn votes.
On the presidential campaign trail in 2018, Haddad pledged to increase the minimum wage, repeal a labour reform that benefited employers over workers and suspend privatisations — all policies close to Lula’s heart.
In elections this year, he lost the race for the governorship of São Paulo state, Brazil’s biggest, to Tarcísio de Freitas, a rightwing ally of Bolsonaro, by 2.5mn votes.
The first challenge facing the new administration is an ongoing battle in parliament to pass a constitutional amendment that would allow Lula to fund his multibillion-dollar campaign promises to boost social spending.
Thierry Larose, a portfolio manager at Swiss bank Vontobel, said he expected other crucial posts in Lula’s economic team to be given to “market-friendly personalities”.
“Some technocrats should show that they still care about fiscal responsibility. But the priority will be given to social spending in favour of the poorest and Keynesian-style policies are likely to prevail,” he added.