KIEV, March 29 – Ukraine will seek by early June to approve pension reform legislation raising the retirement age, the key demand from the International Monetary Fund, Deputy Prime Minister Serhiy Tyhypko said Tuesday.

The legislation, which was originally supposed to be approved earlier in March, has been delayed amid concerns at President Viktor Yanukovych’s administration that it may trigger social unrest.

“I believe that in late May or in early June we can and we should put this issue on the vote in Parliament,” Tyhypko said.

The delay suggests that June or even July is the earliest when the IMF may be able to agree to disburse its $1.55 billion installment within $15.2 billion loan to Ukraine.

The delay of the IMF lending, which was originally expected in March, will put pressure on the government and may increase interest rates if Ukraine decides to borrow from international capital markets.

“The IMF money is really not so critical for us right now,” Tyhypko said in a television interview over the weekend. “We can do without the IMF. But only for a short period of time.”

The government managed to borrow internationally by selling $1.5 billion in Eurobonds earlier this year, alleviating the immediate pressure on the budget.

But any further borrowing without the IMF lending program in place may prove to be problematic.

“As soon as we enter the markets for borrowing without the IMF the rates for us will increase immediately,” Tyhypko said. “And if we borrow at higher interest rates, this market will be de-facto be closed for us later because investors would understand that we try to borrow at any cost.”

The pension reform legislation calls for raising women’s retirement age to 60 from 55 and men’s retirement age to 62 from 60.

The failure to approve the legislation in June may spell out significant financial and economic problems for Ukraine later in the year.

With Parliament going on recess in July, lawmakers will only return to the session hall in September, but their voting will be heavily influenced by politics as the next general election is due in October 2012.

Tyhypko said the failure to approve the pension reform legislation in June may force him to step down.

“If we do not approve this legislation, my position will be very simple – I will resign,” Tyhypko said.

The IMF agreed in July 2010 to provide Ukraine with $15.2 billion, the country’s second bailout loan in two years.

The IMF already released $3.4 billion in two installments last year, helping the government to cover the state budget deficit and to increase foreign currency-reserves.

A team of IMF specialists visited Kiev in February to check the government’s economic policies and said then that more talks were needed to open the way for the payment of around $1.55 billion. (tl/ez)