Brazil’s president-elect, Luiz Inácio Lula da Silva, is leading what he calls a ‘transitional government’ which will work to reverse the main political influences of the exiting President Jair Bolsonaro. Lula’s team is currently prioritising the stabilization of the economy, an increase in environmental protection, and the consolidation of social assistance programmes. However, his narrow victory and the strength of conservative parties in the Congress may limit his reformist agenda.
A political analyst in São Paulo explained, “the conservative Liberal Party is the largest party in Congress and has significant influence in the Senate. Moreover, pro-Bolsonaro parties control the state governments of Sao Paulo and Rio de Janeiro so they could really make life difficult for Lula when it comes to advancing his progressive agenda.” A senior executive at a macroeconomic consultant felt that Lula’s economic constraints would be even more serious than his political ones, “Lula is taking office in a completely different economic context than in his first two terms when a commodities boom allowed him to pour money into social programmes. Today’s markets prioritise fiscal discipline over investment in social priorities so he will have to be careful.”
“Lula is taking office in a completely different economic context than in his first two terms when a commodities boom allowed him to pour money into social programmes.”
Senior executive, macroeconomic consultancy.
On 10 December, Lula announced the appointment of key cabinet names which included traditional heavyweights from the Worker’s Party, such as Fernando Haddad, former mayor of São Paulo and presidential candidate in 2018. Haddad will take the reins of a ministry with the difficult task of strengthening the country’s weak growth, fighting high inflation, and controlling the country’s indebtedness. His appointment coincided with the approval of a legislative proposal to boost public spending and exempt BRL 175 billion from the spending cap of the 2023 budget, causing upset with investors who questioned the fiscal credibility of the plan. Despite some critism, the political analyst felt Haddad’s appointment was politically astute, “Haddad’s appointment makes a lot of sense, he has the political flexibility to negotiate budget allocations with a divided Congress and the new government will have to fight for the approval of every single law.”
“Haddad’s appointment makes a lot of sense, he has the political flexibility to negotiate budget allocations with a divided Congress.”
Political analyst, Brazil
Lula is expected to announce further appointments in the coming weeks while attempting to placate political supporters with high ambitions and significant influence. For example, the Social Development ministry is being coveted by Simone Tebet, the centre-right former presidential candidate who supported Lula, but also by several rising stars within the Worker’s Party.
Lula’s difficulties in forming a cabinet has not gone unnoticed, the political analyst highlighted, “Lula’s victory was narrow and Brazil has a complex balance of powers, you can see that he is already struggling to appoint a cabinet. He will likely name 37 ministers, which will be the second largest cabinet in Brazil’s democratic history and makes it frankly difficult to coordinate. What kind of liaison can you expect between ministers of completely different political views some of whom will be preoccupied by preserving their image for the next presidential election?”
The success of the new president in his first weeks in office will depend on his capacity to attract moderate congressmen to support his initiatives. In turn, this will likely generate frustration among his voter base, which is eager for change, in a context of a divided Brazil as pro-Bolsonaro demonstrations continue to create tensions throughout the country. Last week, protestors in Brasília attacked the Federal Police headquarters as Flávio Dino, former governor of Maranhao who is expected to be Minister of Justice, labelled violent clashes as unacceptable and announced that those responsible for them will soon face legal consequences.