KIEV, June 16 – Parliament, led by President Viktor Yanukovych’s Regions Party, on Thursday gave first-reading approval to controversial pension, bringing Ukraine a step closer towards securing lending from the International Monetary Fund.

The legislation, which gradually increases the retirement age and is therefore extremely unpopular, was harshly criticized by opposition groups, who pledged to reverse it after the next election.

The legislation was supported by 245 lawmakers in the 450-seat Parliament, and comes amid reports that Yanukovych had been quietly working to persuade his Regions Party and independent lawmakers to support it.

At stake is about $3 billion in two installments from the IMF that Ukraine hopes to receive in early August when the country’s trade deficit is expected to worsen due to rising prices of natural gas.

“This is unpopular, but a necessary step,” Serhiy Tyhypko, deputy prime minister, said after the legislation had been approved in the first reading.

The legislation must secure support from at least 226 lawmakers when Parliament is set to debate it and seek to approve it in the second reading in early July.

The draft increases to 60 years from 55 years the age when a woman may retire to secure a pension. The retiring age for men employed by state agencies increases to 63 years from the current 60 years.

The maximum pension is capped at 7,640 hryvnias per month, a measure that is supposed to stop the spread of incredibly high pensions, sometimes exceeding 20,000 hryvnias per month and assigned to former government officials and lawmakers.

The approval of the reform in the second reading was one of the main conditions set by the IMF for resumption of lending to Ukraine.

Finance Minister Fedir Yaroshenko departed for Washington for talks with the IMF, Prime Minister Mykola Azarov said Thursday.

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.

Yulia Tymoshenko, a former prime minister, said the pension reform measure was “genocide” for retiring people, and pledged to cancel it when she comes to power.

“245 non-humans just voted to support the pension genocide in the first reading,” Tymoshenko wrote on her blog. “After their power is rejected, we will cancel this reform.

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. (tl/ez)