(Bloomberg) -- Brazil’s President-elect Luiz Inacio Lula da Silva is inclined to pick former Sao Paulo Mayor Fernando Haddad as his finance chief, entrusting him with the mission of negotiating key economic reforms with congress, according to three people familiar with the matter.

The leftist leader is likely to hand his most important cabinet position to a member of his Workers’ Party, ruling out more pro-business options after appointing a mix of liberal and left-leaning economists to the government transition team, the people said, asking for anonymity as the discussion isn’t public.

Haddad, who has been lobbying for the job, joined Lula’s delegation to the COP27 climate conference in Egypt this week at a moment when the president-elect ponders the make-up of his cabinet. If confirmed, his appointment is likely to create a stir among investors who expected a more technical profile for the role.

Pressure for a quick announcement of key ministerial positions is coming not only from investors who are eager to know who will lead Latin America’s largest economy, but also from the Workers’ Party itself, according to a fourth person familiar with the situation. Lula has already said he will only make such appointments after returning from Egypt.

Haddad’s emergence as a strong contender for the finance job has eclipsed the names of other candidates who had appeared as front-runners early on, including former central bank chief Henrique Meirelles and ex-Health Minister Alexandre Padilha.

Swap rates, which were already rising since central bank chief Roberto Campos Neto delivered a hawkish message during an event hosted by Bloomberg News, jumped further as investors worried about Haddad’s possible appointment. Contracts maturing in January 2024 closed 21 basis points higher. 

Yet Lula has surprised markets in the past, appointing a physician and former mayor of a medium-sized city as his finance minister when first elected president in 2002, and could do something similar this time.

A spokesman for Haddad declined to comment while representatives for the Workers’ Party didn’t immediately reply to a request for comment.

Negotiating Skills

This time, Lula has made it clear he wants his finance minister to be someone able to negotiate with lawmakers thorny economic proposals, including a new fiscal anchor for the country and an overhaul of its tax system. Haddad, who ran for governor of Sao Paulo state but was defeated by a candidate supported by President Jair Bolsonaro, could be that person, the people said. 

While not all of Lula’s allies consider Haddad a skilled political negotiator, the advisers said he’s been able to build a good relationship with Vice President-elect Geraldo Alckmin and the group of liberal economists that joined the transition team: former central bank chief Persio Arida and Andre Lara Resende. 

Moreover, many in the Workers’ Party see him as Lula’s natural successor. When the leftist leader was jailed and barred from running for president in 2018, he tapped Haddad to run in his place. He then lost to Bolsonaro.  

Haddad, 59, holds a master’s degree in Economics and a doctorate in Philosophy from the University of Sao Paulo. He started his career as an investment analyst at a local bank before turning to public service, including a long stint as education minister under Lula and his successor Dilma Rousseff. He also teaches political science and is a consultant for an economics research institute. 

--With assistance from Daniel Carvalho and Felipe Saturnino.

(Updates with market reaction in sixth paragraph. A previous version of this story corrected Haddad’s previous government experience.)

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