Lula names future finance minister; see candidates

After a historic turnaround in the polls, President Luiz Inácio Lula da Silva (PT) will reach his fourth term with a central challenge: balancing public accounts while seeking to fulfill his campaign agenda. An important part of this mission is the choice of who will lead the Ministry of Finance in the next four years. The decision is closely monitored by the financial market, which seeks in the future minister signs of how the government intends to conduct fiscal policy.

Lula has already met with ministers, former ministers and economists to discuss the path to follow, but has not yet defined or given clues about who will be at the head of the economic team in the new term. At least four names, however, appear among the most quoted for the position at the moment. The official announcement should be postponed after President Lula’s trip to Turkey, where he participates in COP31, and to the Philippines, to participate in the ASEAN Summit. The return to Brazil is scheduled for November 16.

Different profiles and autonomy in debate

Economists listened to by g1 assess that those listed for the Farm have distinct profiles, with differences in political weight, articulation capacity and reception by the financial market. There is also a point considered important: what will be the autonomy of the future minister? Adriana Dupita, an emerging markets economist at Bloomberg Economics, recalls that the market tends to look at the future minister’s alignment with investors’ concerns. Another factor considered is the weight it attaches to the role of the state in the economy.

Regardless of the name, the mission will not be simple. The new head of the economic team will find a plaster budget and a Congresso Nacional with a majority of opposition. In addition, it will have to deal with investor mistrust. The market’s own reaction to the results of the polls gave a dimension to this challenge. Lula’s victory surprised the managers, who dismantled the bets they had made counting on a victory from Flávio Bolsonaro (PL). The move knocked down the Ibovespa and made the dollar shoot.

High debt and pressure by adjustment

With gross debt above R$ 11 trillion, equivalent to 82.9% of Gross Domestic Product (GDP), perceptions about the government’s ability to control debt have worsened. This has led investors to demand higher interest rates to fund the country, raising the cost of the dívida pública and putting pressure on the economy. The government then took the first step towards fiscal adjustment. The Senate approved on Thursday (12) the base text of the draft submitted by Senator Jaques Wagner (PT-BA), which brings together measures to rationalize public spending.

According to Minister Bruno Moretti, the proposal has an estimated impact of between R$ 50 billion and R$ 60 billion on the 2027 budget.

Alckmin gains strength as a favorite

The name of Geraldo Alckmin has gained strength and is one of the best seen to take over the Farm. The closeness to Lula, combined with technical ability and political ability, plays in favor of the vice president. For Agostini, among the four listed, Alckmin is the only one with political weight and autonomy to promote an adjustment in the public accounts.

“It would give a better signal to the market.” In the Lula 3 government, the vice-president accumulated the position of Minister of Development, Industry, Trade and Services and played a central role in the negotiations on the tariffs applied by the president of the Estados Unidos, Donald Trump.

Before becoming an ally and candidate for Lula’s deputy in the 2022 election campaign, Alckmin ruled São Paulo for four terms and, for the PSDB, contested the Presidency in 2006 and 2018. In 2022, he joined the PSB and is now one of Lula’s main allies and trusted man. This history also weighs on the market’s assessment. According to André Galhardo, chief economist of the Economic Analysis, investors look at Alckmin’s passage by the command of São Paulo as a reference in the management of public accounts.

Galhardo also points out that Alckmin takes advantage of his capacity for political articulation.

Durigan is an alternative.

After the second round of the elections, the current finance minister, Dario Durigan, did not figure as the main bet to remain in charge of the portfolio throughout the Lula 4 government. His name, however, has gained momentum behind the scenes in recent weeks. Durigan has been leading Lula’s economic team since March 20, when he took over from Fernando Haddad, who left the post to run for the government of São Paulo by the PT.

In nearly eight months, he has been at the forefront of the ministry at key moments, such as the government’s response to U.S. tariffs and the launch of new rounds of the Desenrolla debt renegotiation program.

Alex Agostini of Austin Rating is more critical. For him, despite the speeches, the minister did not show willingness to face government spending and, above all, would not have the autonomy to promote a harder adjustment in public accounts. The divergence of opinions reflects the complexity of the choice that Lula will have to make. The future minister will need to balance political demands and the need to signal fiscal responsibility to the market.

With the definition planned for after the presidential trip, the financial market remains on the lookout behind the scenes of Brasilia. The choice of the next Finance Minister will be a thermometer for the direction of the economy in the next four years. The Boca no Trombone Portal will continue to follow the unfolding of this decision and will bring updates as new facts are confirmed.

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