MADRID (AP) -- The International Monetary Fund says recession-wracked Spain is making progress but is urging policymakers both within the country and in Europe to take "urgent action" to slash the country's crippling 27 percent unemployment rate.

An IMF report released Wednesday praised Spain's reforms for stabilizing the economy, particularly its public finances, but said unemployment was "unacceptably high and the outlook difficult."

Spain has been in recession for most of the past four years following the collapse of its once-booming real estate sector in 2008. Concerns over its public finances have also piled the pressure on the government to rein in spending.

The IMF predicted Spain's economy would see growth later this year. But it warned that despite lower sovereign borrowing costs, credit was contracting sharply and lending rates remained too high.