The IMF has urged the UAE Government to consider cash supplements to some of the country's poorest households to replace subsidies on water and electricity.
Launching planned job creation policies for nationals in the Northern Emirates to battle high unemployment in the region was also important, said the fund, which is based in Washington.
Relocating government agencies and other entities to the north would be another significant measure, it said.
The Government's recent plan to upgrade infrastructure in the Northern Emirates was a step towards more inclusive economic development, it added.
The IMF recommendations came after its annual mission to the country to meet senior government officials and members of the business and financial community.
"The economic recovery is gaining strength, supported by a favourable global environment but subject to increased regional uncertainty," said Taline Koranchelian, an IMF adviser and the head of the mission.
"Risks to the recovery remain, including from possible spillovers of regional events. The current repricing of political and sovereign risks in the region could lead to more challenging market conditions, which may put pressure on the corporate sector including the government-related entities."
The IMF increased its GDP growth forecast for the UAE to 3.3 per cent for this year from a previous forecast of 3.2 per cent. It upgraded its forecast for last year to 3.2 from 2.4 per cent due to higher oil production than expected.
The fund also increased its forecast for Dubai's economy this year to 2.8 from 2.5 per cent previously on the back of improving trade and tourism figures.
The IMF raised its consumer price inflation outlook for this year to 4 per cent after recent rises in global food prices. It had forecast an increase of 2.5 per cent in its October outlook.
