(Adds details, background)
SOFIA, Aug 26 (Reuters) - Bulgaria will aim to run a balanced budget this year and next in a bid to safeguard its currency board regime, Finance Minister Simeon Djankov said on Wednesday.
During a presentation of the new centre-right government's four-year fiscal plan, Djankov said the economy was likely to shrink by a further 2 percent in 2010 after contracting by an expected 6.3 percent this year.
"In the eyes of foreign investors the currency board regime depends on a balanced budget," Djankov told reporters.
"(A balanced budget) will be hard to achieve this year, and the next one will be even harder, but we will succeed."
Bulgaria operates a currency board regime, which significantly curtails central bank operations, leaving fiscal policy as its only tool to influence the economy.
Many analysts believe Bulgaria will have to seek International Monetary Fund aid to avoid slipping into fiscal deficit that may put pressure on its currency peg to the euro.
On Wednesday, Djankov said any questions about a possible IMF loan should be left for January or February next year.
The global downturn has put an end to 12 years of growth in the Balkan country as foreign investors flee and exports plunge.
The government slashed 2009 budget spending earlier this month and announced measures to boost revenues in an effort to avoid end-year deficit.
Djankov said the worst of the crisis would be felt at the end of the year and in early 2010 and expected that the economy may start to recover in the second half of 2010.
The centre-right government plans to freeze public sector salaries and pensions next year, but promised to revise its plans if the economy recovers faster than expected.
It will also leave tax rates unchanged next year but will cut social security payments by 2 percentage points from 31.6 percent to help businesses to protect jobs.
The cut may be increased up to 5 percentage pounts if the budget revenues allow for it.