Brazil’s Lula appoints former Sao Paulo mayor Haddad as finance minister

© Reuters. FILE PHOTO: Former Brazilian President and presidential candidate Luiz Inacio Lula da Silva and Sao Paulo Governor candidate Fernando Haddad react at an election night centered on the day of the Brazilian presidential election, in Sao Paulo Paulo, Brazil

By Lisandra Paraguassu and Marcela Ayres

BRASILIA (Reuters) – Brazil’s leftist President-elect Luiz Inacio Lula da Silva on Friday selected a trusted ally, former Sao Paulo Mayor Fernando Haddad, as his finance minister, ending days speculation about an important date.

Lula will take office on January 1 after defeating far-right incumbent Jair Bolsonaro in October.

Lula also selected professional diplomat Mauro Vieira as foreign minister, former congressman Jose Mucio as defense minister, Bahia Governor Rui Costa as chief of staff and former Maranhao state governor Flavio Dino as justice minister.

Investors have been anxiously awaiting Lula’s choice to run the economy, unsettled by his announcement of a multibillion-dollar proposal to increase social spending from next year, a plan the House of Representatives has yet to vote.

“Markets fear that Haddad’s administration could be marked by an expansion in public spending and an increase in the national debt,” said Leonel Mattos, an analyst at Stonex Market Intelligence.

Following the nomination of Haddad, a staunch figure of Lula’s Workers’ Party (PT), the Brazilian real fell as much as 1.3% against the dollar before covering its losses.

Although Haddad is considered a moderate in PT, investors are worried about the risk of his department overseeing unchecked social spending and a lack of fiscal discipline, as Lula prioritizes meeting the needs of the public. social demand.

Haddad dismissed reports of market fear as “fake news” and pointed to his record as mayor of Sao Paulo, when municipal bonds achieved an investment-grade rating.

As mayor of Brazil’s largest city from 2013 to 2016, Haddad renegotiated his debt with the federal government, reducing it by about 50 billion reais.

Since losing his re-election bid for mayor in 2016, Haddad has described himself as a college professor on Twitter.

A lawyer with a master’s degree in economics and a doctorate in philosophy, his name was mentioned for weeks as the future finance minister.

Haddad’s system claim to Lula grew closer during the 2018 presidential campaign, when he was a PT candidate after Lula was barred from the race due to a bribery conviction that was subsequently overturned. eraser.

He acknowledged the dangers of debt, but argued that public spending can have an exponential effect on economic growth while distributing income to society as a whole.

Haddad has also defended changes to income and property taxes and the introduction of a value-added tax on consumption.

Lula said he would choose a planning minister that was “a great fit” for Haddad, but would decide the total number of ministries his government would have only after the electoral authorities confirmed his victory on Monday. .

Future Justice Minister Dino announced that Andrei Rodrigues will be appointed Federal police chief. Rodrigues previously ran Lula’s security during a tense campaign marred by famous gun violence incidents.

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