Brazil finance minister readies run for Sao Paulo governor

By Marcela Ayres

March 19 (Reuters) – Brazil’s Finance Minister Fernando Haddad is expected to confirm on Thursday he will run for governor of Sao Paulo, giving President Luiz Inacio Lula da Silva a key ally on the campaign trail this year in the country’s most populous state.

Haddad announced at an event on Thursday in Sao Paulo he was stepping down from his role, before Lula said deputy Finance Minister Dario Durigan would replace him, in a widely expected move.

Haddad, 63, signaled in late 2025 he would leave the Finance Ministry early this year, initially saying he wanted to advise Lula on his October reelection bid.

Since then, the outlook has dimmed for the leftist leader, with polls showing him tied in a potential run-off against Senator Flavio Bolsonaro, son of former right‑wing President Jair Bolsonaro, whom Lula narrowly defeated in 2022.

In an interview with leftist news website Opera Mundi last week, Haddad acknowledged “the scenario has become more complicated,” saying he would be a candidate without confirming he would seek to run for Sao Paulo governor.

Haddad and Lula are set to address a Workers Party rally at a Sao Paulo union headquarters, a symbolic home for the president, a former metalworker, at 7 p.m. local time (2100 GMT).

UPHILL BATTLE

Lula faces a more uncertain political climate, exacerbated by an oil-price shock from the widening conflict in the Middle East that threatens to stoke inflation, and Haddad’s race in Sao Paulo is expected to be even tougher.

Surveys show incumbent Governor Tarcisio de Freitas, a popular Bolsonaro ally, with a clear polling lead.

The Workers Party has long viewed a gubernatorial run by Haddad, even with long odds, as a way to bolster Lula’s chances in a key state for the presidential race.

Another electoral defeat would add to a string of ill-fated campaigns for Haddad, a lawyer with a master’s degree in economics and a doctorate in philosophy.

After winning the Sao Paulo mayoral election in 2012, he lost his 2016 reelection bid in the first round. He was defeated in the 2018 presidential contest after replacing Lula, who was barred from running while jailed in a corruption case later annulled on procedural grounds.

Haddad also lost his 2022 bid for Sao Paulo governor, though many in his party saw his candidacy as key to helping Lula secure a majority of the state capital’s votes in that year’s presidential election.

POLICY MILESTONES

As finance minister, Haddad led an overhaul of Brazil’s consumption taxes, whose complexity was long viewed as a drag on the economy.

He also passed a new fiscal framework to rebalance public accounts, with budget targets the government later softened. Haddad faced criticism over Brazil’s rapidly rising public debt, which has been driven largely by high interest payments in concerns about increasing public spending.

Haddad also oversaw changes to Brazil’s income tax that raised the burden on the wealthiest while exempting lower‑income earners, cut regressive tax breaks and advanced several climate‑related financing measures.

He also hiked taxes on corporate credit, foreign‑exchange transactions and imports, reinforcing critics’ claims the leftist government has relied on new revenue rather than tightening public spending.

(Reporting by Marcela Ayres; Editing by Brad Haynes, Rod Nickel and Chris Reese)