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Qatar was chosen to be the hosts of the 2022 FIFA World Cup, beating the United States, Australia, Japan and South Korea.

 

The Emir, his wife Sheikha Moza and other senior members of the ruling family and government were present at the award ceremony in Zurich.

 

Initial estimates for the cost of construction of stadia and other facilities were put at over US $ 50 billion, although the cost is expected to easily cross the US $ 100 billion mark.

 

December 2, 2010

 

 

Analysis and Forecast: Decreasing Risk


 

Qatar’s winning bid has allowed Qatar to be catapulted into a leadership role in the GCC, after years of being seen as the newcomer in the region, in terms of development. In particular, it has replaced the UAE as the focal point for cultural and sporting activities in the region. Dubai, for instance, has failed in a previous bid to host the Olympic games.

 

The bid will likely secure a major part of the diversification efforts, as the country embarks on massive development projects and attracts businesses from the region.

 

However, there remain concerns about Qatar’s ability to provide the necessary infrastructure and whether Qatar has sufficient funds. Qatar has a budget surplus estimated at about US $3 billion in 2010, and over US $35 billion of revenue. Public expenditure includes 30% on infrastructure projects. However, with the very high costs for the facilities’ ambitious plans, Qatar will almost certainly be looking at massively borrowing. It has to ensure that with such levels of spending it does not accumulate long-term debt and end up in a situation similar to Dubai’s. The government has not yet clarified how it intends to ensure that this massive spending will ensure long-term viability and economic benefits to the country, and ultimately contribute to diversifying the economy.

 

Therefore whilst winning the bid is a very good opportunity for Qatar, and the GCC, it also presents serious challenges that need to be addressed sooner rather than later.

 

The figure below shows the current Qatari economy break-down: