Álvaro, the economist who saved a failed plan

" This is our choice, it's our proposal for the country ," said Minister of the Presidency António Leitão Amaro at the Council of Ministers briefing in which he announced Álvaro Santos Pereira as the government's choice to be governor of the Bank of Portugal. He wasn't lying, he was omitting something... Previously, (at least) four candidates were considered, the first of which was economist Ricardo Reis, and that's why, in the corridors of power, one hears that the OECD chief economist's availability ultimately served to save the government's face in a process that started poorly but ended (very) well. Santos Pereira was Sarmento's trump card.

The government knew from day one that Mário Centeno's term ended on July 19, 2025, and had already decided to replace him, breaking a "tradition" of renewing mandates, which had occurred with Vítor Constâncio and Carlos Costa, but let the process drag on until the 25th hour. Ironically, Mário Centeno had a proposal for supervisory reform that would have extended the governor's term to a single seven-year term. Had he followed through with his proposal, which he later dropped, he would still be governor...

The government's favorite, from the outset, was economist and LSE professor Ricardo Reis (who, in fact, advised Minister António Leitão Amaro's doctoral thesis, specifically on the legal independence of central banks), and Vítor Gaspar wasn't the second. There were reportedly half a dozen invitations and surveys, the most recent of which were this July. The preference of the prime minister and the political elite, namely the Minister of the Presidency and the Minister of Finance, Miranda Sarmento, was for a "foreigner." Sérgio Rebelo and Luís Cabral were also invited, but both declined the challenge. The problem is that the prime minister managed the invitations and surveys as if he were extending political invitations to the government, aiming to keep the choice secret until the very end.

In the political elite, those four economists belonged to a sort of "champions league," primarily because of their academic profile. And then there was a second, restricted group of candidates, which also included Álvaro Santos Pereira. He had an advantage: his international prestige, having made his way into the OECD on his own, without political influence, and even become chief economist of the Paris-based international institution. Just a few weeks ago, he was one of the Portuguese present at the ECB meeting in Sintra (and one could count those who were there).

In the political elite, those four economists belonged to a sort of "champions league," primarily because of their academic profile. And then there was a second, restricted group of candidates, which also included Álvaro Santos Pereira. He had an advantage: his international prestige, having made his way into the OECD on his own, without political influence, and even become chief economist of the Paris-based international institution. Just a few weeks ago, he was one of the Portuguese present at the ECB meeting in Sintra (and one could count those who were there).

Just two weeks ago, the government was conducting soundings for the Bank of Portugal, while at the same time, the prime minister admitted that Centeno met " all the conditions to be governor ," a statement that surprised even government officials. Luís Montenegro never spared Centeno and the manner in which he was appointed to the position of supervisor after serving as António Costa's finance minister for five years. Worse still, when he opened the door to the possibility of succeeding António Costa as prime minister of a Socialist Party government and, more recently, when he reflected—his own words in an interview with RTP—on a candidacy for Belém, with the support of the Socialist Party.

Successive contacts failed, and the government began to come under pressure. The decision was made not to leave Centeno another day at the helm of the Bank of Portugal. Thus, the week of the end of the term ended without a finalized candidate, and the decisions on income tax and pensions served as a protective shield to gain another week before choosing a candidate. After those rejections, Álvaro Santos Pereira's name became unavoidable. His recognized competence as an economist, his international experience in an organization the size of the ECB, and the advantage of being an outsider in an institution that lives on its own (and protected by the ECB's shield, which allows almost anything), shielded the choice from partisan political criticism.

It was necessary, at the same time, to resist the pressure that Mário Centeno exerted, both internally and externally, to force a reappointment. He appealed to the ECB, Brussels, and the Presidency of the Republic. All of this served to pressure the Prime Minister and to gain a showdown with Joaquim Miranda Sarmento. And after the Prime Minister's remarks, the possibility of a reappointment, which had never been on the table, gained media traction.

It had been a tense week. The invitation had already been extended to Álvaro Santos Pereira, who asked to provide a definitive response by Wednesday, but he soon signaled his willingness to accept the challenge. ECO's report on the last-minute appointments, specifically Centeno's chief of staff for a second five-year term, and Observador 's revelations about the purchase of land in Feira Popular to build a new headquarters, with a promissory contract signed in May, created the opportunity for the Finance Minister to request an opinion from the IGF on the deal, a decision made public late on Tuesday the 22nd. But early that morning, Mário Centeno met with the Finance Minister for the first, and last, meeting between the two politicians in this process. In that meeting, which was reportedly brief, Centeno learned in person that the Government was not counting on him for a new term. From the corridors of the Ministry of Finance, which had been his for five years, he departed for Frankfurt for the last meeting of the Board of Governors in which he participated. And he couldn't resist appealing to the ECB president, who even tried to ask the government for explanations about the announced change, but reportedly received no response. Previously, Marcelo, once again without information, tried to pressure Montenegro to keep Centeno for at least another year, arguing that he could become ECB vice-president to replace the Spaniard De Guindos.

With Álvaro Santos Pereira's positive response in hand, the government could breathe a sigh of relief and rehearse a strategy to prevent Centeno from being victimized, also supported by the Socialist Party (PS), which stepped in to defend its former minister. Previously, the governor "responded" with explanations in the newspapers, in Expresso and Público, assuring that Joaquim Sarmento already knew all the details of the deal, but the government was already thinking about the next day.

With Álvaro Santos Pereira's positive response in hand, the government could breathe a sigh of relief. And rehearse a strategy that would prevent Centeno from being victimized, also supported by the Socialist Party (PS), which stepped in to defend its former minister. Previously, the governor "responded" with explanations in the newspapers, in Expresso and Público, assuring that Joaquim Miranda Sarmento already knew all the details of the deal, but the government was already thinking about the next day. For this very reason, at the council of ministers that approved Álvaro Santos Pereira's appointment, the Minister of Finance added the choice of the president of the insurance and pensions supervisor, Gabriel Bernardino. Furthermore, he did not appear at the weekly briefing , and the explanations were left to the Minister of the Presidency. The order was to give political leverage to the Minister of Labor, Palma Ramalho, and to the changes in labor law, and to defuse the 'Centeno case.' The vacation will help.

" [Álvaro Santos Pereira] has succeeded on his own merits on the international stage as an independent expert in his field (...) and Portugal is deeply honored by his success ," said Leitão Amaro. Now, it will be Álvaro Santos Pereira 's turn . By September at the latest, he will have his hearing and will then be the new governor for the next five years.