Saudi Arabia’s reported budget deficit of 94.85 billion riyals (about 25.28 billion dollars) in the fourth quarter of 2025 marks a significant quarterly shortfall, but not, in itself, a fiscal emergency for a state with sizeable reserves and borrowing capacity.
Deficits of this magnitude, however, acquire a different meaning when viewed alongside long-term, capital‑intensive commitments such as hosting the 2034 FIFA World Cup, which will overlap with the most investment‑heavy years of Vision 2030.
A single quarter’s deficit can reflect deliberate counter‑cyclical or expansionary policy, timing of capital spending, or temporary revenue softness, especially in an oil‑dependent economy where receipts are volatile by definition.
Yet when quarterly gaps are part of a broader pattern of sustained deficits, they raise questions about how new obligations—stadium construction, transport upgrades, security, and event‑related urban development—will be financed and whether they will deepen reliance on debt or asset drawdowns. The World Cup, in this sense, becomes a stress test of the kingdom’s fiscal framework rather than an isolated event.
Expansionary Spending and Vision 2030 Pressures
Saudi Arabia’s fiscal policy is explicitly expansionary, anchored in the ambition of Vision 2030 to transform the economic structure away from oil through huge investments in real estate, tourism, logistics, and infrastructure.
The state has launched around 1.3 trillion dollars’ worth of real estate and infrastructure projects over the past eight years, including mega‑developments such as NEOM, Red Sea Global, Qiddiya, Diriyah Gate and New Murabba, each carrying multibillion‑dollar price tags and long execution horizons.
These giga‑projects require sustained capital injections, often front‑loaded, in parallel with spending on housing, transport networks, and quality‑of‑life initiatives embedded in various Vision Realization Programs.
Adding a World Cup on top of this agenda does not just mean building or upgrading stadiums; it implies intensified timelines for airports, metros, roads, hospitality capacity, digital infrastructure and crowd‑management systems, all of which may bring forward expenditures that might otherwise have been spread more gradually.
The key structural risk is not simply the absolute level of spending, but the concentration of large commitments in a relatively short period, which can amplify financing needs exactly when revenue or financing conditions are less favorable.
Oil Dependency and Revenue Volatility Risk
Despite diversification efforts, oil still underpins Saudi Arabia’s revenue base, both directly via hydrocarbon receipts and indirectly via the Public Investment Fund’s capacity to leverage the oil‑derived national wealth. This leaves fiscal planning exposed to global oil price cycles, OPEC+ production decisions, and structural shifts in demand, including energy transition policies in major consuming economies.
Between now and 2034, even modest price swings can materially affect annual revenues and thus the ease with which the state can fund large‑scale event‑related investments.
World Cups are expensive undertakings: recent tournaments have cost between about 5 and 20 billion dollars for countries like Germany, South Africa, Brazil and Russia, while Qatar’s broader World Cup‑linked spending has been estimated at around 200 billion dollars including long‑term infrastructure.
Although Saudi Arabia already plans many of the required assets for other purposes, oil price downturns during peak investment years could force a choice between maintaining planned World Cup‑adjacent infrastructure spending, cutting other expenditures, raising taxes and fees, or increasing borrowing. This volatility risk is structural because it stems from the composition of revenues, not from any single deficit print.
If oil prices remain high and stable, the World Cup could be accommodated without undue strain, especially if non‑oil revenues grow as intended; if prices weaken just as construction and preparation costs peak, financial buffers might be drawn down more quickly than anticipated, or borrowing could accelerate. That path dependency is central to assessing the prudence of layering another mega‑event onto an economy still significantly tied to hydrocarbons.
Debt Trajectory and Borrowing Costs
Saudi Arabia has increasingly used sovereign borrowing—both domestic and international—to finance deficits and support its investment program, complementing drawdowns from reserves and the Public Investment Fund’s portfolio activities. In a world of higher global interest rates than the 2010s, expanding issuance to cover both ongoing deficits and World Cup‑related spending carries clear cost implications: coupon payments rise, debt servicing takes a larger share of the budget, and the margin for policy flexibility narrows over time.
For a country with substantial assets and relatively low debt‑to‑GDP by advanced‑economy standards, increased borrowing is not inherently problematic, but the trajectory matters. If deficits such as the Q4 2025 shortfall signal a period of structurally wider gaps—driven by Vision 2030 capex and event‑linked spending—markets will pay close attention to medium‑term consolidation plans, including the timing of subsidy reforms, non‑oil tax measures, and privatizations.
Credit rating agencies will likewise scrutinize whether incremental World Cup commitments are accompanied by realistic revenue projections or whether they rest on optimistic assumptions about tourism inflows and post‑tournament usage.
Higher borrowing costs feed back into project economics: stadiums, transport systems and hospitality investments that might look viable under low interest rates can become more expensive to carry over decades when debt servicing costs are elevated.
If the state shoulders a large portion of the risk, pressures can crystallize on the sovereign balance sheet rather than being contained within private consortia.
Opportunity Costs and Public Spending Priorities
Hosting a World Cup during a period of widening deficits crystalizes the issue of opportunity cost: every riyal used for a stadium or ceremonial infrastructure is a riyal not available for schools, healthcare, social safety nets, or strategic diversification projects such as renewable energy or advanced manufacturing.
While some elements of World Cup spending are overlapping—transport upgrades that are needed anyway, urban improvements that fit tourism goals—others are event‑specific, with limited long‑term economic yield.
Historically, the economic return on World Cup‑related investments has been mixed. Some hosts have leveraged tournaments to accelerate necessary infrastructure, while others ended up with underused “white elephant” stadiums and debt burdens with modest measurable gains in output or employment beyond the short term.
Saudi Arabia’s challenge is to ensure that any incremental spending justified by 2034 is tightly integrated with Vision 2030’s core priorities rather than becoming an expensive parallel track.
The tension is particularly sharp in a state‑led model where capital allocation is centrally driven: resources directed toward ensuring an impressive World Cup may compete with funding for smaller, potentially higher‑productivity initiatives in SMEs, innovation ecosystems, or human capital development.
The fiscal deficit in Q4 2025 underscores that choices are already being made at the margin; the World Cup effectively raises the stakes of these trade‑offs.
Execution Risk Amid Rapid Transformation
Saudi Arabia is managing an unusually high density of simultaneous giga‑projects: NEOM, Qiddiya, Red Sea, Diriyah, New Murabba, Expo 2030 in Riyadh, and numerous transport and urban upgrades all have overlapping timelines.
Each project involves complex contracting, regulatory approvals, environmental considerations, and coordination across ministries and agencies. In this context, adding the 2034 World Cup increases execution risk in several ways.
First, administrative capacity is finite. Even with reorganized government entities and performance‑management structures under Vision 2030, there is a risk of bureaucratic overload, leading to delays, cost overruns, or quality compromises.
Second, the construction sector itself can become stretched: shortages of skilled labor, materials, and project management expertise may bid up costs and create bottlenecks as multiple large projects vie for the same resources. Third, tight timelines imposed by fixed‑date events like a World Cup leave little room to defer or re‑sequence spending if fiscal conditions deteriorate.
Cost overruns are common in mega‑events, and the more ambitious the baseline project pipeline, the greater the chance that aggregate expenditure will exceed initial estimates. From a fiscal‑risk perspective, execution risk translates into budgetary uncertainty: the state may find itself committing additional funds late in the cycle to ensure readiness, precisely when it may wish to consolidate.
International Perception and Investment Climate
Saudi Arabia’s strategy relies heavily on attracting foreign direct investment and private capital into Vision 2030 projects, including PPP models for infrastructure and tourism assets.
Persistent deficits and very high state‑led capital spending can be read by investors in two divergent ways: as a sign of strong government commitment to growth and transformation, or as a potential source of macro‑fiscal risk if spending appears unanchored from realistic long‑term revenue capacity.
The 2034 World Cup intersects with this narrative. On one hand, hosting a global event can bolster the country’s profile, support soft‑power goals, and showcase new cities and tourism zones to potential investors.
On the other hand, if market participants perceive the tournament as an emblem of overreach, financed by rising debt amid volatile oil revenues, sentiment could shift toward caution. The Q4 2025 deficit, though manageable, feeds into that perception if it is part of a pattern of higher‑than‑expected shortfalls.
Moreover, the World Cup’s financing structure will be closely watched. A model that mobilizes substantial private capital on commercially viable terms could reassure investors about the state’s ability to de‑risk and share burdens.
A model dominated by direct public spending, with opaque cost estimates and limited transparency on future operating subsidies for stadiums and facilities, could have the opposite effect, especially if coupled with further upward revisions in overall public‑sector borrowing needs.
Lessons from Previous World Cups
Recent World Cups offer useful benchmarks on fiscal and economic outcomes. South Africa’s 2010 tournament cost an estimated 7.2 billion dollars; analysis suggests it added around 0.5 percent of GDP in 2010, but many stadiums have struggled with long‑term utilization and maintenance, raising questions about value for money.
Brazil’s 2014 World Cup, with costs around 11.6–19.7 billion dollars depending on the measure, became associated with public discontent over perceived misallocation of funds, as several expensive stadiums ended up underused while social infrastructure needs remained acute.
Qatar’s 2022 World Cup stands at the other end of the spectrum: the country reportedly spent in the region of 200 billion dollars on stadiums and related infrastructure, much of it tied to a broader urban and transport transformation strategy.
While the tournament was technically successful and accelerated infrastructure build‑out, the long‑term economic payoff will depend on whether Qatar can sustain higher levels of tourism, business activity, and non‑hydrocarbon growth, which is still being evaluated by institutions such as the IMF.
For Saudi Arabia, the comparative lesson is less about the exact cost figure and more about integration and legacy. Hosts that embedded World Cup infrastructure into pre‑existing, clearly justified development plans tend to fare better than those that built event‑specific assets with limited post‑tournament use.
Given the country’s vast Vision 2030 pipeline, the risk is not lack of projects but potential duplication or misalignment—new stadiums or transport nodes that do not fit optimally into long‑term urban and economic geography, yet add to the public debt stock.
Balancing Ambition and Sustainability
Saudi Arabia enters the World Cup preparation phase with advantages many past hosts did not have: large financial reserves, a powerful sovereign wealth fund, relatively low public debt‑to‑GDP, and a comprehensive long‑term development plan in Vision 2030.
These factors provide capacity to absorb deficits such as the Q4 2025 shortfall and still pursue ambitious investments, including those linked to 2034.
Yet these strengths do not eliminate structural risks. Continued dependence on oil revenues, a rising debt trajectory in a higher‑rate world, intense capital‑spending pressures from giga‑projects, and the fixed deadlines of multiple mega‑events (Expo 2030 and the World Cup) create a complex fiscal landscape.
The combination of Q4 2025’s deficit, the broader pattern of expansionary policy, and the cost profile of recent World Cups elsewhere suggests that the tournament will serve as a test of fiscal discipline rather than a straightforward growth catalyst.
If Saudi Arabia can integrate World Cup spending tightly with Vision 2030 priorities, maintain transparent cost management, mobilize substantial private participation, and adapt to oil‑market volatility without undermining social and diversification investments, the fiscal risks may be contained and even converted into long‑term gains.
If, however, tournament‑related commitments exacerbate deficits, accelerate borrowing without clear returns, or crowd out more productive uses of capital, the 2034 World Cup could come to symbolize the tensions inherent in pursuing rapid transformation through state‑driven, capital‑intensive strategies. Rather than a simple opportunity or liability, it is best understood as a high‑profile examination of Saudi Arabia’s fiscal management, diversification progress, and long‑term economic sustainability.