Lula weighs Fonteles, Durigan and Alckmin to command economy in 2027
The make-up of the economic team for Luiz Inácio Lula da Silva's fourth term will be one of the president's main decisions after re-election. The choice of ministers and the fiscal measures set for 2027 are expected to influence expectations on interest rates, public debt and economic growth, and the financial market will be watching closely.
Piauí governor Rafael Fonteles has gained strength behind the scenes to take charge of the economic team, according to Token Times. Lula has signalled to interlocutors that he would like the governor on the team, though no formal invitation has been made, and Fonteles has said publicly he has not discussed the possibility with the president. Fonteles built fiscal experience as finance secretary of Piauí and as president of Comsefaz, the national committee of state and Federal District finance secretaries, and took part in discussions on the tax reform. Any nomination would require him to leave the state he has just been re-elected to govern.
The continuation of Dario Durigan is another possibility under consideration. The current finance minister took the post after Fernando Haddad left to run for governor of São Paulo, and served as executive secretary at the ministry for most of Lula's third term, taking part in the design and execution of economic measures including debt renegotiation programmes. Vice-president Geraldo Alckmin, who combined the vice-presidency with the Ministry of Development, Industry, Trade and Services and gained ground in trade negotiations with the United States, is also among those mentioned. Others cited in speculation include Planning and Budget minister Bruno Moretti, central bank president Gabriel Galípolo, senator Camilo Santana and former transport minister Renan Filho. None has received a formal indication for the finance ministry. Decisions are expected after the president returns from an international trip due to end on 16 November.
Whoever takes the job will have to steer negotiations on the 2027 budget, present measures to contain spending growth and manage the commitments Lula made during the campaign. The budget proposal sent by the executive forecasts a primary surplus of R$ 18,6 bilhões, a result that will depend on revenue, spending and measures approved by Congress. Among the alternatives discussed are a review of mandatory spending, cuts to tax benefits and changes to the rules for growth of the constitutional floors for health and education, which are tied to revenue and can grow at a different pace from that allowed for overall spending by the fiscal framework. Any change would require approval of a constitutional amendment.
For the market, the political viability of the proposals will matter as much as their estimated impact on public accounts. The government will need to negotiate with a more right-leaning Congress, in which the PT will have only nine senators. The composition of the economic team may indicate the degree of continuity with policies adopted in the third term, and the reaction of future interest rates and the exchange rate to the executive's decisions will be another indicator to follow before new lawmakers take office in February 2027.
