Pakistan received a USD 6.7 billion IMF bailout package last year to help the country achieve economic reforms, particularly in its troubled energy sector.
"The IMF is encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth," Jeffrey Franks, the fund's mission chief for Pakistan, said in a statement in Islamabad.
The IMF's Pakistan staff mission visited Dubai from May 1-9 to conduct discussions on the third review of the bailout package, which was approved by the fund's executive board last September.
"Economic indicators are generally improving, with growth gaining momentum, external finance improving, and credit to the private sector rising," Franks said, but added that core and headline inflation were also rising.
The inflation rate currently stands at 9.2 per cent but the IMF wants Pakistan to "target an additional reduction in inflation towards their medium-term goal of 6-7 percent in the next fiscal year", which starts on July 1.
The mission also noted an improvement in the balance of payments situation and efforts being made by Pakistan to build up SBP reserves and stabilise sentiment in the foreign exchange market.
"The authorities' reform program remains broadly on track," Franks said, describing as "strong" the fiscal performance of the government during the first nine months of the current financial year 2013-14.
At a joint press conference with Franks on Saturday, Pakistan's Finance Minister Ishaq Dar said the country's foreign exchange reserves had soared following the bailout package.