The International Monetary Fund on Thursday praised Spanish authorities for their "steadfast" implementation of all the measures of their financial reform program.
"Financial market conditions have improved dramatically during the program, with risk premia on external borrowing by Spain's banks and sovereign down more than 75 percent and equity prices up more than 50 percent during the program period," the Fund said in its fifth and final progress report on the program.
Nevertheless, it said "important challenges for the financial sector remain," pointing to continued tight credit conditions as an obstacle to an economic recovery.
The IMF has acted as supervisor for an up to 100-billion-euro European bailout of Spain's banking system. The Iberian nation eventually only required 41.3 billion euros.
Referring to the country's real-estate sector, which collapsed in 2008, sending the economy into a years-long tailspin, the Fund said housing prices had begun to stabilize after falling between 30 percent and 40 percent from the peak of a long-building bubble.
The IMF said Spain's fiscal consolidation effort in 2012-2013 was among the strongest in Europe, but it said more substantial reforms - including measures to further enhance banks' ability to lend and support recovery - are needed in the midterm.
The multilateral lender cited persistently high levels of unemployment in Spain, noting that elevated joblessness is expected to continue for a long time and predicting that the unemployment rate would come in at 25.8 percent at the close of 2014. EFE