(Bloomberg) -- The incoming leader of Brazil’s ruling party in the lower house is promising to let go of the more radical views embraced by his group and rally behind Finance Minister Fernando Haddad’s economic agenda, whose success he considers crucial for President Luiz Inacio Lula da Silva’s reelection chances in 2026.
Lindbergh Farias, 55, hails from a more leftist wing of the Workers’ Party that has been responsible for most of the friendly fire against Haddad’s austerity plans. He is married to Gleisi Hoffmann, the party’s hard-line president, who regularly takes to social media to vociferate criticism against financial markets, the central bank and even the finance chief. But as he braces for the leadership position, Lindbergh said he will defend the government’s economic agenda as part of a strategy to help Lula win a fourth term.
“We must shield the government, Haddad’s team and agenda — I want to do that as a leader,” he said in an interview with Bloomberg News last week, from his office in Brasilia. “You know that sometimes I have some personal positions but now I must take into account the views of the entire party; that’s my role now.”
Half way into Lula’s four-year mandate, his administration finds itself at a critical juncture. Investors doubt the president’s ability and willingness to put an end to a spending spree that is producing budget deficits of nearly 10% of gross domestic product. A growing fiscal credibility crisis has sent the real tumbling more than 20% against the dollar this year, on track to be confirmed the worst-performing major currency of 2024. Concerns about the health of the 79-year-old leader, following an emergency brain surgery earlier this month, have added even more uncertainty.
In a video released last week, Lula said he will “remain attentive to the need” of additional austerity measures, after the approval of the spending-cut package he sent to congress failed to assuage investor concerns. And while the economic agenda for 2025 remains unclear, Lindbergh says he wants to help by supporting any cost-cutting bills sent to congress.
At the same time, he will give priority to proposals giving rights to informal workers, which he sees as essential for the government to reconnect with the poor after the weak performance of the left in this year’s municipal elections. Founded in 1980 with the support of trade unionists and labor movements, the Workers’ Party now struggles with the reality of growing informal work and weak unions in Brazil.
“We have to find something that would have a positive impact on informal workers,” Lindbergh said. “The job profile has changed a lot, we need to have a dialogue.”
Another priority for 2025, he said, is to approve the government’s plan to exempt from income tax workers earning up to 5,000 reais ($812.75) a month. The proposal, announced by Haddad together with the spending-cut plan as demanded by Lula, contributed to sour investor sentiment toward Brazil, as many saw it as evidence that the administration isn’t truly committed to austerity.
Lindbergh refuted such a claim, saying investors hold a grudge against Lula and ignore cuts to social programs that are the hallmark of a Workers’ Party administration. “We’ve cut into our own flesh, but markets do not recognize the tough decisions that have been made. We’re kind of disappointed.”
He is hopeful that relations between the administration and investors will improve once Gabriel Galipolo assumes the presidency of the central bank on Jan. 1. Appointed by Lula initially as monetary policy director and now to head the monetary authority, Galipolo will build bridges between both groups because “he’s respected by markets” and “gets along well” with Lula and Haddad, Lindbergh said.
Plan A, B and C
Pacifying relations with the financial community is important for the government as Lula will need all the support he can get to win another election, if he really decides to run. Despite the president’s recent health problems and age, Lindbergh sees no other name that could lead the Workers’ Party to victory in the next presidential vote.
“Lula not being a candidate is a hypothesis that frightens us all, lawmakers and supporters,” he said. “Lula is our plan A, B and C.”
Haddad or Education Minister Camilo Santana would be good successors for Lula, he said, but only in 2030.
Without Lula, some of the parties that currently form the ruling coalition could switch allegiance and support Tarcisio de Freitas, the right-wing governor of Sao Paulo, Lindbergh said. Considered a political heir to former President Jair Bolsonaro, who’s currently barred from running for public office, Freitas says he has no intention of running for president in 2026 as he intends to seek reelection in Sao Paulo.
“Tarcisio’s big dream is that Lula gives up,” Lindbergh said, adding that only the president is currently able to stop the governing coalition from breaking apart. “For us of the Workers’ Party, there is nothing more important than consolidating the Lula government and reelecting him.”
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