DEAD SEA, Jordan (Reuters) – Turkey expects to issue more than the $4.5 billion in Eurobonds it had planned for 2003, and would use potential US financial backing to rein in short-term debt, Turkey’s economy minister said on Saturday. Ali Babacan told Reuters on the sidelines of an extraordinary World Economic Forum meeting in Jordan that the economic impact on Turkey of the US-led war against Iraq had been less than expected. Any potential revisions to the 2003 budget would not affect a 6.5 percent primary surplus target, he said. «For this year we were planning to issue Eurobonds of only $4.5 billion… But so far, we already issued Eurobonds of $4 billion. And it’s for certain that we are going to even exceed the original plans,» Babacan said. Turkey had planned to issue $4.5 billion in bonds this year, and on Wednesday issued a $750-million tap to its 2008 bond, making a total of $2.6 billion in dollars and 1.1 billion euros ($1.28 billion) in euros for this year. Babacan said Turkey would use potential US financial backing to help reduce its expensive short-term debt. Washington’s Iraq war budget pledged a $1 billion grant to Turkey, convertible into up to $8.5 billion in loan guarantees. «This $1 billion grant can be used as a grant, or can be converted into a loan, or a loan guarantee,» Babacan said. Asked if Turkey had decided how to get the money yet, he said: «No. It’s not finalized yet.» Asked how the funds would be used if the modalities were agreed, Babacan said: «It is a credit and it is going to be used to pay down short-term debt and convert short-term debt into long-term debt.» «One of our problems, related to our debt stock, is the short maturity. The US concessional loans, if we agree finally, will help us have access to low-cost long-term financing… which we would be very happy to use.» The minister said it was too soon to speculate about the possible timing of the release of the US funds. Babacan said the war on neighboring Iraq had not hit Turkey’s economy as hard as some people had feared. «We had to adjust our estimates of average interest rates for this year to only 1 percent up from original estimates. And also we are going to have some lost tourism revenues, maybe half a billion dollars less than originally planned,» he said. Asked if Turkey might have to revise its current budget, Babacan said: «Toward the end of the year, we will see what is going on… If necessary, it (any revisions) will be toward the end of the year, but… we cannot deviate from our 6.5 primary surplus target.» Also on Saturday, the International Monetary Fund (IMF) said Turkey must speed up economic reforms to win the latest $500 million loan tranche, without indicating a date for a possible board meeting for the release of the loan. «We now hope soon to complete discussions for the fifth review, which will lay the basis for IMF board approval of the next loan tranche,» said Odd Per Brekk, the IMF representative in Turkey, in a conference in the southern city of Antalya. The ruling Justice and Development Party (AKP) pledged allegiance to the IMF pact, worth $16 billion, and said it would ask Parliament to put off its annual summer recess until August from July to pass the outstanding reforms. «Looking to the immediate period ahead, the government needs to address a number of issues in order to ensure continuity in the reform effort,» Brekk said. Analysts said the slow progress in reforms might delay the $500 million loan tranche by up to three months. Turkey has pledged to implement six key reforms in June: an overhaul of laws to speed up privatization, a sale of the loan packages of failed banks and the elimination of «special budget appropriations» are among them. Brekk underlined the need for commitment to budget targets, social security reform, further direct tax legislation trimming excessive investment incentives and privatizations. «The process of reducing redundant positions in state enterprises will need to continue. Also, privatization should be given a shot in the arm,» he said. Turkey has also pledged to adopt the IMF regulations strengthening the independence of Turkey’s bank watchdog by the end of June. «It will be important that the independence of both the Central Bank of Turkey and the BDDK be preserved, and be seen as supported by the government,» Brekk said. «The institutions’ decisions in individual instances must be, and must be seen to be, free from political interference,» he added.