UPDATE 1-Panama economy could grow 5 pct in 2010 -ministry

(Rewrites throughout with finance ministry comments)

PANAMA CITY, Nov 13 (Reuters) - Panama expects economic growth of at least 5 percent next year and is planning fiscal reform measures as it works to obtain an investment-grade rating on its debt, the finance ministry said.

The reforms "will make tax collection more equitable and maintain ideal levels of spending and the deficit," Deputy Finance Minister Dulcidio de la Guardia told a news conference on Friday.

Standard & Poor's said this month that it could raise Panama's debt rating to investment grade, citing solid growth prospects and an improving fiscal outlook.

S&P said on Nov. 9 that the tax reforms were expected to boost government revenues by about 0.75 percent of gross domestic product. For the first time, the reforms could extend Panama's tax reach into the business activities of a major free trade zone.

De la Guardia said the government will present its fiscal plan to Congress in December.

While many Latin American economies have been in recession this year, Panama's economy will grow about 3 percent, Finance Minister Alberto Vallarino said at the same news conference

Next year, the economy will grow "no less than 5 percent," Vallarino said.

Panama is currently rated BB-plus by S&P as well as Fitch Ratings. Moody's Investors Service has a Ba1 rating. All three are one notch below investment grade status.

Panama's economic growth rate has slowed sharply after averaging above 8 percent in recent year. Traffic passing through the Panama Canal, a driver of the economy, has fallen due to a worldwide recession.

The slowdown has in turn cooled inflation. Consumer prices in Panama rose 0.2 percent in October from the previous month, bringing 12-month inflation rate to 0.7 percent, the national statistics agency said.

Consumer prices had risen 8.7 percent in 2008. (Reporting by Elida Moreno; Editing by Diane Craft)