The IMF said that the authorities in Iraq have created a "macroeconomic stability" in the war-torn country after it conducted a review following a $436m (£230m) emergency loan.
But it noted that its 52% forecast growth followed a 35% collapse last year amid an "almost complete halt in economic activity". It also said that the ongoing violence and the Iraqi debts made its lending risky.
"Without the commitment of the international community, the opportunity for reform risks being lost, and Iraq could return to a regime of autocracy, renewed economic decline and rising poverty," the IMF wrote.
Foreign debt
The Fund also said that aid with Iraq's estimated $124.9bn in foreign debt was very important. The "Paris Club" of creditor nations has met many times to design a debt forgiveness package, but has yet to reach a deal.
The U.S. favors a 90% forgiveness, while other countries - including France and Germany - say that it is far too much for a country that has Iraq's oil wealth.
International development campaigners said that the U.S. has never supported such remarkable levels of debt forgiveness for poorer highly-indebted countries such as many in sub-Saharan Africa.
Key reforms
The IMF's report was trying to find upsides to Iraq's current situation. The interim Iraqi government - and its predecessor, the occupation authorities - had made many key reforms despite the risky security situation and economic collapse, it said.
Among those listed were the introduction of a new currency, new banking and tax laws and the resumption of much of Iraq's oil production.
In a letter attached to the report, the interim government said that it is planning to have a full oil sector reconstruction plan by the end of next year.
The IMF said that oil output is set to average 2.1 million barrels a day (bpd) in 2004 after falling to 1.2 million bpd in 2003. It expects it to rise to 3.5 million bpd by 2009.
It also predicts that oil revenues - making up some 80% of overall production - of $16.2bn in 2004, will rise to $22bn by 2009.