The International Monetary Fund said that Spain made good progress on repairing its damaged economy, although it warned additional steps need to be taken to battle against a negative outlook.

In the last statement of its yearly assessment of the economy in Spain, the IMF urged Spain’s government as well as European authorities to increase the country’s job creation, while moving along further to clean up the banking sector.

The IMF said strong progress in reform has helped to stabilize the country’s economy, while fiscal and external imbalance are correcting quickly. However, unemployment said the IMF remains at an unacceptably high figure with a difficult outlook ahead.

The review by the Fund, referred to as Article IV, is received as Spain struggles to break free of a five year recession and bring down their rate of unemployment of 27%, which is one of the highest in all of Europe.

The IMF, which echoed the European Commission’s recommendation of last month, said the Spanish government’s top priority needed to be to reform its labor laws further making it easier for businesses to modify the shifts that lay off workers if activity is short of expectation.

In addition, it needs to adopt a new structure for taxes to promote more job creation.

The IMF said fiscal consolidation needed to be made as job and growth friendly as possible. The Spanish government needed to achieve this by remaining flexible on its deficit targets.

The IMF added that the EU must also do its part by building a banking union faster and the ECB should take the measures needed to help lower the cost of borrowing that are faced by the private sector in Spain, while maintaining open its option of a program for bond-buying.

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