(Refiles to fix typo in headline)

WASHINGTON, June 5 (Reuters) - Mongolia is on track to meet its end of year fiscal target but the authorities will need to maintain expenditure controls, the International Monetary Fund said on Friday .

"Fiscal policy is on track to achieve the 6 percent of GDP fiscal deficit by end-year," the IMF said after consultations with the government following elections in May. "This will still require continued expenditure restraint while safeguarding the fiscal resources needed to protect the poor during this period of economic adjustment."

In a statement, the IMF said Mongolia had so far successfully implemented its $229.2 million IMF program since April and a staff mission would recommend disbursement of the next tranche of $40 million under the loan.

"While challenges and risks remain, especially as regards the fiscal outlook and the banking system, the Mongolian authorities' continued commitment to strong policies should help safeguard the recent hard-earned economic stability," said Steven Barnett, IMF mission chief to Mongolia.

He said inflation had fallen, the currency had moved flexibly and central bank currency reserves have grown since the loan program was approved.

"Conditions are now in place for a gradual easing of monetary conditions," Barnett added.

(Reporting by Lesley Wroughton; Editing by Diane Craft)