Iraq's economic outlook has improved, thanks to better security, higher oil output and more exports, said the International Monetary Fund (IMF).

In its first review of Iraq, the IMF said it had kept to targets set out in its $746.3m (£418.5m) loan scheme.

"After several very difficult years" Iraq has a good chance to rebuild its institutions and infrastructure to attain higher economic growth, it said.

But the IMF said future progress depended on further structural reforms.

'Structural reforms'

"Future success will hinge on continued improvements in security, sounds management of oil revenues, and implementation of key structural reforms," it said.

Also necessary for future progress was the modernizing of public financial management, while two leading commercial banks needed restructuring.

An increased budget for 2008 would help speed up economic reconstruction, after several years of underinvestment, said the financial body.

But it warned that scrutiny was needed to guarantee that the quality of public investment was maintained.

The IMF said oversight and anti-corruption measures in the hydrocarbon sector had improved, adding that a new legal framework for the sector would help boost investments in the industry.