Moreover, the spending on interest rates is projected to rise over the coming years, he added.

De Mooij's comment came during an IMF press briefing on Wednesday to launch its flagship report Fiscal Monitor Report on the sidelines of the annual meetings of the IMF and the World Bank, which are being held in Marrakech through 15 October.

The report projects Egypt’s gross debt-to-GDP ratio to hit 92.7 percent, the highest among emerging markets and middle-income economies in FY2023/2024.

This is Egypt’s highest government gross debt since 2017 when it posted close to 98 percent.

However, the IMF expects it to decline to 88.1 percent in 2024 and 76.4 percent in 2028.

“Egypt has a high budget deficit as well, which is a concern. But the country has positive indices on the primary balance that excludes interest rates,” De Mooij told Ahram Online.

The report projects Egypt’s primary balance to be the highest in nine years in 2023, hitting 2.3 percent of GDP in 2023 before declining in 2023-2027 and bouncing back to 2.3 percent in 2028.

The primary balance is the difference between the government’s revenues and spending on providing public goods and services.

In this respect, De Mooij pointed to the IMF's Extended Fund Facility (EFF), a loan programme, with Egypt as a way to keep the debt level on a sustainable downturn through 2028 and to regain confidence in Egypt’s public finances.

“Several measures need to be taken, including mobilizing the country’s revenues through setting new tax measures. There are opportunities in the value added tax, for instance, and rationalizing the tax exemptions Egypt is adopting.”

In June, the cabinet abolished tax exemptions for state entities and affiliated enterprises to enforce equality between the private and public sectors and extended licensing rights to new industries in free zones.

This came as part of the strategy Egypt is implementing that aims to level the field for the private sector in the national economy. This is a key commitment Egypt has pledged to the IMF under the EFF loan programme.

On the spending side, De Mooij told Ahram Online that there is a great opportunity for Egypt to cut fossil fuel subsidies, which is very important to phase out in light of the current global climate transition process.

“The sale of equity stakes in Egyptian state-owned enterprises to investors is progressing. It will provide proceeds that can be used to reduce the country’s high debt level,” he added.

Under its EFF loan programme with the fund, Egypt pledged to secure up to $5 billion from the sales of state-owned assets in light of its initial public offering programme. 

Since announcing its privatization programme in March, Egypt has unveiled limited progress regarding the sales of its assets.