In its first-ever "Article IV" review of the economy, the IMF praised the initial moves to free up its currency in recent months and encouraged the government, politically isolated for a quarter-century, to stick to the path of reform.
"Myanmar's new government faces a historic opportunity to jump-start development and lift living standards," the Fund said in the milestone report.
"Myanmar could become the next economic frontier in Asia if, with appropriate reforms, it can turn its rich natural resources, young labor force, and proximity to some of the most dynamic economies, to its advantage."
But the Fund cautioned the government, now starting to enjoy a gush of foreign investment as it opens up, to take each step carefully with a focus on maintaining economic stability.
"IMF economists believe that any rapid reforms on a large scale could make any potential mistakes very costly. Although planned reforms will take time to implement, prioritisation is essential to deliver tangible benefits to the majority of the population," it said in a note accompanying the review.
"We see certainly a strong reform momentum coming out of Myanmar," said Meral Karasulu, IMF mission chief for the country.
"Over the past two years, the progress is very tangible."
Karasulu said the Myanmar government's move to put the kyat currency on a managed float at the beginning of April was a key beginning.
For years the currency has been tightly controlled, with multiple rates used by the government and various markets, and has served as a deterrence to trade and investment in the country.
Now, says Karasulu, the government is committed to unifying the rates under a managed float by the time it hosts the Southeast Asian games at the end of 2013.
"There are still many informal market exchange rates," Karasulu said.
But, she added, "I do not find it unrealistic" to aim for complete currency reform by the end of 2013.
"Others took... up to two years" as well.
Karasulu said the government has moved away from simply printing money to fund its deficits, which together with distorted exchange rates has fuelled extreme inflation in recent years.
The IMF has seen a "significant decline" in so-called deficit monetisation, by "about half," she said.
That has helped calm price rises: inflation that averaged nearly 33 per cent in the fiscal year that ended in March 2008 was down to 8.2 per cent in fiscal 2010-11, and 4.2 per cent in the year just ended.
Karasulu said the government could easily further cut the practice by allowing the state banks and insurance companies to invest more of their reserves in state bonds. Currently both groups face tight restrictions on such purchases.
While the country still owes several billion dollars to bilateral and development lenders it defaulted on years ago, the IMF said the government's finances are fairly stable and show promise in the macroeconomic environment.
The economy grew an estimated 5.5 per cent last year and will pick up pace to about 6.0 per cent in the current year, with inflation rising to 5.8 per cent on average.
With a surge in foreign investment sparking a rise in imports, the country's current account shortfall is expected to widen.
Even so, Myanmar's reserves were $7.1 billion in September 2011, and "are expected to remain comfortable" this year.