Fernando Haddad (PT) – former mayor of São Paulo, Minister of Education and candidate for the Presidency of the Republic in 2018 – is the most quoted candidate for the position of Minister of the Fazenda in the next Lula government.

Lula has already declared that he wants to bring the management of the economy back under the command of two Ministries (Fazenda and Planning) and no more than just one, as desired by Bolsonaro (Ministry of Economy, headed by Paulo Guedes).

Haddad has a rich and varied academic background: he is a lawyer, with masters in economics and philosophy and teaches political science at the University of Sao Paulo. If he were to actually be appointed as Minister of the Fazenda, this would make him the natural candidate to succeed Lula in the 2026 presidential elections (who will be 81 at that date).

The Ministry of the Fazenda is the most important and strategic one and the decision to entrust it to Haddad, therefore to a politician and not to a more technical profile, is causing mixed reactions in the economic and financial environment of Brazil.

Haddad is seen as a possible interpreter of an unorthodox economic vision, promoted by some economists at the University of Campinas, which prioritizes growth and development, even at the expense of fiscal balance. It is the school that inspired former minister Guido Mantega during the presidency of Dilma Rousseff and the theoretical basis of the “economic matriz” which caused so much damage between 2013 and 2015, plunging Brazil into a serious economic recession.

The fear of entrepreneurs and investors (Brazilians, but also foreigners) is that the new Lula government will abandon or neglect the rules of fiscal responsibility (expenditure ceiling, objective of a primary surplus in the state budget) for a policy of development and capable of blowing up the fiscal balance and therefore causing inflation to explode, further devaluing the real and thus causing a sharp increase in interest rates and, consequently, a sharp recession.

The possible appointment of Persio Arida (one of the creators of Plano Real and a highly esteemed Orthodox economist) as Minister of Planning could serve as a “counterweight” to that of Haddad, but Arida has not yet given his availability. In that role he would be a supporting actor with respect to Haddad, whose ministry would be responsible for the most strategic decisions with the greatest impact on the economy and public finances.

In the coming days, Lula should officially appoint the new ministers and from that moment on, the lines of the new government's economic policy will certainly be clearer.