Brazil's finance minister Haddad resigns to launch a high-stakes bid for Sao Paulo governor

RIO DE JANEIRO — Brazilian Finance Minister Fernando Haddad, who is seen as the potential political heir of 80-year-old President Luiz Inácio Lula da Silva, has resigned, according to a decision published in Brazil’s official gazette Friday.

Haddad, who lost against former President Jair Bolsonaro in the 2018 run-off vote, said Thursday he will run for governor of Sao Paulo state. He will likely be up against current Gov. Tarcísio de Freitas, an ally of the embattled far-right ex-leader who has said he will run for reelection in the state.

Haddad was replaced by Dario Durigan, according to the decision signed by Lula. Durigan had been executive-secretary of the finance ministry.

“I don’t run in elections to bargain, I run to win,” Haddad said Thursday during an event in the city of Sao Bernardo do Campo, in Sao Paulo state. “Political victory is always possible: you just have to present yourself with integrity and a strong plan."

Haddad is unlikely to win against de Freitas, who is currently leading in the polls, but running for governor will give him more prominence on the national stage, said Paulo Henrique Cassimiro, a politics professor at Rio de Janeiro State University.

Lula's Workers’ Party “is really counting on him, including for Lula’s succession,” said Cassimiro. “Even if he loses, running brings a very large amount of political capital, raises the person’s profile and makes the candidate’s name more widely known.”

In the event of a Lula victory — who announced his bid for reelection last October — Haddad could return as finance minister, Cassimiro said.

Lula and Flávio Bolsonaro, the former president ’s eldest son who has also said he will run for president, are neck and neck in a hypothetical run-off vote between the pair, according to recent polls.

During the event in Sao Paulo on Thursday, Lula said the political situation in Brazil was “very grave.”

“If we don’t bring forward the best people we have in each city and each state, and if we don’t take up the fight to defend democracy, we run the risk, through inaction, of handing democracy back once again to the fascists,” the left-wing president said.

Haddad ran for president in 2018 because Lula was in prison. Lula spent 19 months behind bars, but the Supreme Court later annulled his convictions, paving the way for him to run against Bolsonaro in 2022, whom he defeated.

Bolsonaro is currently serving a 27-year prison sentence for attempting a coup despite that electoral defeat.

While at the helm of Brazil’s finance ministry, Haddad pushed through huge changes in how the country taxes goods and services, a proposal that had been in the works for decades, as well as a popular income tax reform.

But his term as finance minister was not always smooth. In 2024, memes nicknaming Haddad ‘Taxad’ — a pun combining tax and his surname — flooded the internet after a tariff on cheap international online shopping generated controversy.

Carla Beni, an economist at the Getulio Vargas Foundation, said that one of Durigan’s challenges will be managing the impacts of the Iran war on Brazil’s economy.

Last week, Lula's government announced a temporary federal tax relief on diesel as energy prices around the world soar. The financial loss for Brazil's public accounts will be compensated by a 12% tax on crude exports, the government said.

“A very intense war like the one we’re seeing in the Middle East is something quite complex for Durigan to manage,” Beni said.