Egypt to end fuel subsidies 'within three years'

The plan, which follows the staff-level agreement of a $12 bllion International Monetary Fund loan, also aims to increase fuel prices to 65 percent of their actual cost during the 2016/17 fiscal year.

This austerity measure comes as Egypt attempts to rein in its battered economy, which has suffered from a crippling dollar shortage and a devaluation of the Egyptian pound.

Since Egypt's 2011 uprising, the political and social instability experienced by the country has driven away droves of tourists and foreign investors.

This has proven detrimental for Egypt, which relies heavily on imports for staple foods and primary goods used in manafacturing.

The IMF injection, which is the largest to be received by any Middle Eastern country, will be linked to progress on a number of economic reforms outlined by the international lender.

This includes the cutting of subsidies, the instatement of a value-added tax and a move towards a more flexible exchange rate regime.

"What was agreed lately with the IMF delegation in Egypt is cancelling fuel subsidies within three years," an anonymous government source told Reuters.

Elsewhere, a spokesman for Egypt's Petroleum Ministry told the news agency that "no decisions have been issued on that matter".

At present, premium grade gasoline is sold at 58 percent of its cost in Egypt.  Subsidies also allow for 80-octane category fuel to be sold at 57 percent of its cost, while diesel goes for approximately 53 percent.

In July 2014, Egypt decreased spending on fuel subsidies and raised prices by up to 78 percent. This was initially seen as part of a five-year plan to lower subsidies, however it was not continued in 2015/16.

Petroleum subsidies currently cost Egypt 55 billion Egyptian pounds a year [$6.2 billion]. Cairo hopes to cut this by 20 billion Egyptian pounds [$2.2 billion] this year.