Following a visit by fund officials, it said the country’s economic backdrop “remains challenging”.

Amine Mati, IMF senior resident representative and mission chief for Nigeria, said: “Economic activity contracted in the first quarter of the year by 0.6%, mainly as maintenance stoppages reduced oil production.

“However, following four quarters of negative growth, the non-oil economy grew by 0.6% on the back of a rebound in manufacturing and continued strong performance in agriculture.”

He warned that preliminary data indicated significant revenue shortfalls for the first half of this year, with the interest-payments-to-revenue ratio remaining high at 40% and projected to increase further.

High domestic bond yields and tight liquidity continued to crowd out private sector credit.

Mati said: “Faced with these challenges, the government has started implementing [an] economic recovery and growth plan...however, near-term vulnerabilities and risks to economic recovery and macroeconomic and financial stability remain elevated.”

Growth of 0.8% this year would be insufficient to make a dent in reducing unemployment and poverty, he added.

Mati concluded: “Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent.”