Singapore has announced it will allow the entry of 22 out of 27 activists who had been banned from the country ahead of the IMF meeting next week.
Mr Wolfowitz believes it is important to hear the views of activists
The move follows criticism from World Bank President Paul Wolfowitz, who described Singapore's restrictions on activists as "authoritarian".
He said the decision to ban accredited activists ahead of the 19 September meeting violated a previous agreement.
The issue had led to growing tension between the two sides.
Both the World Bank and the IMF had argued the presence of pressure groups was key to improving the work of financial institutions.
But Singapore said the ban was because the 27 activists had taken part in disruptive protests in other nations and posed a threat to law and order.
Officials said that the decision to allow in the 22 activists had been made after input from the World Bank and the IMF.
But five members of the group still faced restrictions. If they tried to enter Singapore, they "would be subject to interview and may not be allowed in", a statement from the organising committee said.
Earlier in the day, Mr Wolfowitz said Singapore's stance on the issue had harmed its image.
"Enormous damage has been done and a lot of that damage is done to Singapore and self-inflicted," he told a meeting in Singapore.
"I would argue whether it has to be as authoritarian as it has been," he said, adding that he had raised the issue with Singaporean Prime Minister Lee Hsien Loong.
Singapore had banned public protests for the duration of the IMF and World Bank meetings amid concerns they could lead to violence and damage to property.
A small area has now been set aside for designated protests
Following the ban, pressure groups and non-governmental organisations decided they would demonstrate on Batam Island instead - an Indonesian island located close to Singapore.
Singapore has now set aside an indoor area where activists can gather to express their views, but it is only an eight metre by eight metre square.
Around two dozen activists held a protest in the area, wearing gags saying "No Voice".
"These limits are ridiculous," Reuters news agency quoted Haidy Ear-Dupuy of NGO Forum on Cambodia as saying. "Singapore is a developed country; it needs a developed perspective on citizens speaking up."