Opinion – Bernardo Guimarães: What to expect from Minister Fernando Haddad

What to expect from Fernando Haddad as a minister?

Haddad is a politician who leaves marks. He’s not the type to touch the ball sideways.

At the Ministry of Education, Haddad modified Fies rules, created the ProUni and thus greatly expanded access to higher education (at a cost), instituted the Ideb to assess the quality of education, among many other things.

As mayor of São Paulo, he made headlines with bike lanes and bus lanes, created SP Negócios, instituted a great way to regulate transport using apps (Uber), was less successful in trying to solve the problem of cracolândia… remember many actions of your management. In contrast, how many do not even remember the name of the current mayor?

This characteristic makes many economists apprehensive. He will be an ambitious minister, he will not limit himself to doing the basics. In theory, this can be great and it can be bad. Many fear the worst.

I think he will hit and miss, but, optimistic that I am, I believe the balance will be positive.

For over a month, he has been reaching out to academics I know — and I would be delighted to see them in ministry. Personal issues would prevent the majority from accepting an eventual invitation. But it seems clear to me that he wants at least one academic economist of “orthodox” lineage on his team.

The question of the moment is the balance of public accounts. Fernando Haddad understands that this is an important point.

Haddad has no history of fiscal irresponsibility, but untying the fiscal knot is a complicated task, as it involves negotiations with the National Congress, the allied base, the PT and even states and municipalities if the objective is to change forms of taxation. The political cost is high.

One of Haddad’s concerns is the quality of government spending. At the Ministry of Education, he instituted Simec, which aimed precisely at improving the quality of these expenses.

In conversations, the issue of productivity worries him a lot—rightly so. Fiscal balance is a necessary condition for the economy to function properly, but it is productivity growth that will make us richer and more prosperous.

The question is how to achieve this increase in productivity.

In the past, policies such as BNDES’ highly subsidized credit helped to worsen the fiscal situation, in addition to directing capital to less productive sectors. Apparently, Haddad is not in favor of this type of measure, at least along the lines of the Dilma government.

On the other hand, judging by past statements, Haddad seems to believe that the state can play an important role in inducing economic development. It is not clear to me what this means, nor how this will translate into public policy.

Part of the uncertainties will be resolved when the secretaries of the Ministry of Finance are appointed. It is worth paying special attention to the Secretary of Economic Policy.

The financial market will take a step back from the minister for a long time. His posture, let’s say, little deference in interviews and conversations does not help this relationship. But my assessment is that Haddad will not be this government’s economic problem. Other appointments leave me more dissatisfied.

The challenge is huge. Haddad arrives to put out a fire and prepare the ground for growth. Earth burning, like the bonfire of Saint John. He likes challenges. I wish you a lot of success.