EUROPE - Ukraine has agreed to "robust structural reforms" of its pension system in exchange for a $15.5bn (€11.9bn) loan from the International Monetary Fund (IMP).

The IMF's executive board announced a deal last night that will see $1.9bn in funds made available to the country immediately.

John Lipksy, first deputy managing director of the IMF and a former vice-chairman of JP Morgan, said: "Ukraine is emerging from a difficult period during which the economy was severely hit by external shocks and exacerbated by domestic vulnerabilities.

"At the core of the authorities' economic programme is a comprehensive consolidation strategy to safeguard fiscal sustainability.

"Fiscal adjustment will start in 2010 and deepen in 2011-12, backed by robust structural reforms of the pension system, public administration and the tax system."

Further payments for the two-and-a-half-year loan will be made to the country, subject to quarterly reviews.

The country's pension deficit is projected to be 12% by 2025, more than doubling to 30% by 2050, according to United Nations figures.

Additionally, pension expenditure was projected to be 17% of GDP in 2010.

As part of the deal, the Ukraine agreed to domestic gas price increases, as well as reforms to a number of other institutions with the aim of eliminating energy subsidies.

A previous agreement with the IMF collapsed last year after the country's government abandoned austerity measures ahead of an election and began increasing minimum wages.