KIEV, June 15 – Passage of an increase in retirement age for women before July 8 may help Ukraine secure $3 billion from the International Monetary Fund in August, Deputy Prime Minister Serhiy Tyhypko said Wednesday.

The failure to approve the reform, which is unpopular with lawmakers, may have personal implication for Tyhypko: he earlier pledged to resign in the event the reform is rejected.

“If Parliament approves the pension reform legislation in the first reading this week, and in the second reading between July 4 and July 8, we have to expect an IMF team very soon,” Tyhypko said.

“It will work for a week and sometime in early August we can have a decision by the IMF board” to resume the lending, Tyhypko said.

The IMF suspended its $15 billion lending program for Ukraine since March delaying its installments after the government had refused to hike gas prices for households by 50% on April 1 and also postponed the pension reform that increases retirement age for women.

President Viktor Yanukovych has been quietly working with Regions Party and independent lawmakers to make sure the legislation is approved this week, opening way for the resumption of lending by the IMF, people familiar with the situation said.

The legislation, which gradually increases retirement age for women to 60 years from 55 years, has been scheduled to be debated and voted later this week.

Top government officials have been sharply split on whether Ukraine needs to immediately resume borrowing from the IMF.

Tyhypko believes that a quick resumption of the lending is important for the Ukrainian economy, and would allow corporations to borrow internationally at lower rates.

But his powerful opponent, Prime Minister Mykola Azarov, believes Ukraine can do without the IMF money, at least in the short term, and even asked the Washington-based lender to ease some of its demands.

Azarov asked the IMF recently to postpone indefinitely a measure hiking natural gas prices for households by 50%. The measure was due on April 1, but was later postponed.

Tyhypko said that Ukraine may qualify for $3 billion installment in August if the IMF decides to combine two tranches that had been so far postponed.

“Because there was the delay, and we discussed this in Washington, it’s quite possible two tranches will be combined, and Ukraine will get the two tranches at once,” Tyhypko said.
“All the money from the two tranches, about $3 billion, will go to the foreign exchange reserves of the National Bank,” Tyhypko said.

Ukraine needs to repay about $11 billion in debt this year, according to Azarov. (tl/ez)