The IMF now expects the eurozone's fourth largest economy to grow by 3.1 percent this year, compared with its April forecast of 2.6 percent.
The Washington-based body said it could not rule out that the growth could be even higher than its latest estimate as a result of the "momentum" created by the government's economic reforms.
Last year, Spain's economy grew by 3.2 percent, double the eurozone average, as it continues to recover from a severe crisis caused in part when a property bubble burst in 2008.
But dark clouds remain, particularly where unemployment is concerned.
Spain's jobless rate remains high at 18.7 percent, the second highest level in the eurozone after Greece's.
And while it is gradually falling, critics say many of the jobs created are short-term and temporary.
READ MORE: Spain is well on the road to recovery