Fernando Haddad is expected to step down as Brazil's finance minister to formally launch a bid for governor of São Paulo, with deputy minister Dario Durigan named as his replacement. Haddad's move comes as President Lula faces a tighter-than-expected re‑election outlook, shown in polls tying him with Senator Flávio Bolsonaro. The São Paulo race is likely to be difficult: incumbent Tarcisio de Freitas holds a clear polling lead, and Haddad has faced several recent electoral defeats. As finance minister, Haddad pushed major tax reforms and a new fiscal framework, while drawing criticism over rising public debt and tax increases on certain transactions.
Haddad Steps Down as Finance Minister to Run for São Paulo Governor, Lula Ally Joins Campaign Trail
FILE PHOTO: Brazil's Finance Minister Fernando Haddad speaks during a ceremony to launch a digital platform for tax reform in Brasilia, Brazil January 13, 2026. REUTERS/Adriano Machado/File Photo
Brazil's Finance Minister Fernando Haddad is expected to officially announce his candidacy for governor of São Paulo on Thursday, stepping down from his ministerial role to take a central place on President Luiz Inácio Lula da Silva's campaign trail in the country's most populous state.
At a São Paulo event on Thursday, Haddad, 63, said he would leave the Finance Ministry. President Lula confirmed that deputy finance minister Dario Durigan would replace him, a move that had been widely anticipated.
Haddad had signaled in late 2025 that he planned to vacate the finance post early this year, initially casting the decision as a way to help advise Lula on his October re‑election campaign. Since then, the political landscape has become more challenging for the left: polls show Lula running level with Senator Flávio Bolsonaro — son of former president Jair Bolsonaro — in a potential second round.
In a recent interview with left‑leaning news site Opera Mundi, Haddad acknowledged "the scenario has become more complicated," saying he intended to be a candidate but stopping short of explicitly confirming a Sao Paulo gubernatorial bid. Haddad and Lula are scheduled to speak at a Workers' Party rally at a São Paulo union headquarters — a venue symbolic of Lula's working‑class roots — at 7 p.m. local time (2100 GMT).
Uphill Battle
Analysts expect Haddad's campaign to face steep challenges. Opinion polls show incumbent Governor Tarcisio de Freitas, a prominent Bolsonaro ally, with a clear lead in São Paulo. The state is politically pivotal: the Workers' Party views a Haddad run as a way to bolster Lula's prospects in a key electoral battleground, even if victory is uncertain.
Haddad has experienced several high‑profile defeats in recent years. After winning the São Paulo mayoralty in 2012, he lost re‑election in 2016. He ran for president in 2018 after replacing Lula on the ticket while Lula was barred from running; Haddad was defeated. He also lost the 2022 Sao Paulo gubernatorial race, though his presence on the ballot helped Lula capture critical votes in the state capital during the presidential contest.
Policy Milestones And Criticisms
As finance minister, Haddad led a major overhaul of Brazil's consumption tax system, a reform aimed at simplifying collections and boosting economic efficiency. He introduced a new fiscal framework intended to rebalance public accounts, although the government later softened some budget targets.
Haddad also advanced changes to income tax that raised taxes on the wealthiest while exempting many lower‑income earners, cut some regressive tax breaks and promoted climate‑related financing measures. At the same time, he implemented higher levies on corporate credit, foreign‑exchange transactions and imports, prompting critics to argue the government has relied more on new revenues than on tightening public spending.
Economic pressures complicate the political picture: an oil‑price shock linked to the widening Middle East conflict risks stoking inflation, increasing the stakes for both Lula and Haddad as they prepare for the election year.
(Reporting by Marcela Ayres; Editing by Brad Haynes, Rod Nickel and Chris Reese)
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