CAIRO (Reuters) - Egypt said on Tuesday it was close to agreeing a lending programme with the International Monetary Fund (IMF) to ease its funding gap and was seeking to secure $7 billion annually in financing over a three-year period.

The prime minister ordered the central bank governor and minister of finance to complete negotiations for the programme with an IMF team that will visit Egypt in the next few days, the cabinet said in a statement.

There was no immediate comment from the IMF. Cairo's statement was the first official confirmation that talks with the IMF were indeed under way.

Economists welcomed the news coming after a turbulent few weeks for Egypt's currency, which has plummeted to new lows on the black market as confusion mounted over the direction of monetary policy.

"It's great. Finally," said Hany Genena, head of research at Beltone Capital. "Confidence will be restored in the government and central bank. Secondly, we will see flotation of the pound, if not tomorrow, next week, the week after."

Egypt's economy has been struggling since a mass uprising in 2011 ushered in political instability that drove away tourists and foreign investors, both major earners of foreign currency. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth, while the value of the Egyptian pound has plummeted on the black market in recent weeks as expectations of a second devaluation this year mount.

The government has pushed ahead with its existing reform programme, which includes plans for Value Added Tax (VAT) and subsidy cuts that were put on hold when global oil prices dropped.

A VAT bill is in its final stages but has faced resistance in parliament due to concerns over inflation, which has touched seven-year highs since the currency was devalued by 13 percent in March.

Egypt's ambitious, home-grown fiscal reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed since the World Bank is waiting for parliament to ratify economic reforms including VAT.

A cabinet minister told Reuters last month that Egypt had started negotiations with the IMFand that the central bank was leading the talks.

(Reporting by Amina Ismail; writing by Lin Noueihed; editing by Mark Heinrich)