Bank of America Merrill Lynch research estimates loss to Gulf state economy if FIFA bribery claims lead to rerun
Qatar would be facing a loss to its economy of around $16 billion if FIFA decided to strip the country of the 2022 World Cup as a result of recent bribery allegations, according to a new report.
The FIFA ethics committee leading a probe into corruption allegations surrounding the awarding of the 2018 and 2022 world cups to Russia and Qatar respectively is set to produce its report to the organisation's Adjudicatory Chamber by the middle of this month. It is being led by US lawyer Michael Garcia.
Research published by Bank of America Merrill Lynch (BofA Merril Lynch) estimates that if Qatar is stripped of the World Cup, direct capital expenditure (related to building stadiums and hotels) will fall by $16 billion, which is equivalent to 7.5 percent of GDP, or 1-1.5 percent in each year in the run-up to 2022.
It added that the annual drag on real GDP growth was likely to be smaller at around 0.5 percent, though, as much of the money would have been paid in salaries and goods to overseas providers.
However, it said that the larger infrastructure spend would most likely continue. BofA Merril Lynch's MENA economist Jean-Michel Saliba said: "Our five-year projected cumulative on-budget central government capital expenditure stands at circa $100 billion (which could represent around a third of total investments during the period)."
He added that without a World Cup to aim for such schemes could "lose execution focus and face potential delays", but were still likely to go ahead in some form.
"Infrastructure projects, central to Qatar’s transformation vision, form the bulk of it and a number of mega-projects such as Lusail City, the metro, railway or seaport were planned independently of the World Cup."
A fresh set of bribery allegations were made against a Qatari former member of FIFA's executive committee, Mohamed bin Hammam, by UK newspaper The Sunday Times last month.
It said that it had a cache of thousands of emails from Bin Hammam which showed that he operated a slush fund from which payments were made to garner votes from the heads of a number of African football federations.
However, Qatar's Supreme Committee for Delivery and Legacy, said that it won its bid fairly by working harder than rivals.
In a statement issued in response to new allegations last month, it said: "We knocked on more doors, made more phone calls and took more meetings than our competitors. We travelled the world explaining in vivid detail why, in our view, a World Cup in Qatar made more sense than anywhere else."
It also stressed that Bin Hammam, although Qatari, was not part of its bid team and that it had "strictly adhered" to FIFA rules when bidding.
It added: "We have fully co-operated in a completely open and transparent manner with FIFA’s independent Ethics Committee investigation into the bidding process."