Saudi Arabia reported its first budget surplus in nearly 10 years, thanks to its revenue being ramped up by elevated oil prices.

The 2022 surplus came to 102 billion riyals ($27 billion), constituting 2.6% of Saudi gross domestic product, according to the kingdom’s finance ministry, releasing what it said were preliminary estimates.

Total revenue for this year was estimated at 1.234 trillion riyals, while spending amounted to 1.132 trillion riyals.

The government of the hydrocarbon-rich country approved a 1.114 trillion riyal budget for 2023 and expects to still see a surplus of 16 billion riyals. That’s a significant reduction from this year’s surplus, amounting to just 0.4% of GDP, but is a surplus nonetheless and is based on an oil price far lower than what many analysts expect for next year.

“Our analysis suggests the budget is based on an oil price forecast of around USD 75 (per barrel), well below our house forecast of USD 105 (per barrel) for next year,” Daniel Richards, MENA economist at Dubai-based bank Emirates NBD, wrote in a research note.

Economists estimate Saudi Arabia needs the price of oil to be between $75 and $80 a barrel in order to balance its budget.

International benchmark Brent crude futures traded up 0.2% at $77.45 a barrel on Thursday afternoon in London, while U.S. West Texas Intermediate futures rose 1.4% at $73.09.

Growth for the country is forecast to drop significantly compared to this year, however, slowing from 8.5% this year to 3.1% in 2023, the finance ministry said.

Many Middle Eastern banks are receiving neutral outlooks from ratings agencies, the ratings agency Fitch reported, which it says reflects “solid economic conditions.” But Saudi Arabia stands out for having positive outlooks on most of its banks’ Issuer Default Ratings, “driven by improvements in its balance sheet given higher oil revenue and fiscal consolidation,” Fitch wrote in a report this week.

Still, analysts at Goldman Sachs think expenditure will overshoot the budget next year, as Saudi Arabia’s government pursues expensive megaprojects like the futuristic city of NEOM, Vision 2030 investments, and more. Saudi Crown Prince Mohammed bin Salman launched Vision 2030 in 2016 with the aim of dramatically transforming and modernizing Saudi Arabia and reducing its economic reliance on oil revenues.

Goldman also forecasts a lower oil price for the next year than the analysts at Emirates NBD.

“Our own projections, based on an average oil price of $90/bbl in 2023, lead to revenues of SAR 1,187bn, slightly below the 2022 estimated out-turn,” a report from Goldman Sachs on Thursday said.

“With our expenditure forecast at SAR1,213bn (9% above budget), the result would be a deficit of 0.7% of GDP.”

Spending overshoot took place in 2022, with current expenditure going over budget by 14%, Goldman’s report wrote, citing data from the government’s budget statement. Capital spending, meanwhile, was 64% higher than budgeted and government spending increased by 9% year-on-year.

“The expenditure overshoot was mainly related to spending on military and security, as well as healthcare,” Goldman’s analysts wrote.

Geopolitical events, primarily Russia’s war in Ukraine and ensuing sanctions on Russian oil from Western countries, have put pressure on oil supplies, sharply increasing energy prices.

“Much of the fiscal situation and growth story is of course directly related to high energy prices, and indirectly related to the factors and geopolitical events moving prices,” Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, told the AFP.

“Yet,” he added, “Saudi Arabia does deserve credit for its fiscal consolidation and economic reforms, which have also helped the overall economic picture,” CNBC reports.