Dwindling revenue accrued to the federal government is no longer news. There is steady decline in revenue due to market slow down and if not checked could lead to recession if we are not in it already. These times might be here to stay for long, but the big question remains: “What is the way out?”
An economy has two major spendings; Government and private sector spending. They both complement each other. The government gets taxes in VAT, corperate taxes etc to boost their spending. The Private sector on the other hand benefit from government spending on infrastructure to enable them do and stay in business. But when there is a decline in revenue to both the government and the private sector certain steps are needed to stimulate growth:
1. Reduce taxation: A Relaxation of cooperate tax helps to keep more money in the private sector which employs a greater percent of the population. It helps to keep people in job; people who will pay the tax needed by the government.
2. Reduce and peg interest rates: If interest rates are reduced and pegged, banks and other financial institutions will be forced to lend as they will need to give out more cash to make same profit. This increases cash flow in the economy as cash hoarding is discouraged. Businesses have access to cheap credits and cash transactions and cash flow are maintained. This helps to sustain VAT and other taxes accrued to the government.
3. Reduce spending on recurrent expenditure: Bonuses and other non taxed constituents of salaries of politicians would have to be slashed or capped. Retrenchment is not a very viable option as it triggers fear in the market. This reduction is to take care of reduced revenue from taxation. Major government spendings should be geared towards further wealth creation.
4. Encourage patronage of home made products: The government must make sure that public institutions like healthcare, education, and every other needs sourced locally remain attractive to the public. Increasing duties on imported good is not the best but making sure local products compete favorably with foreign ones is surely better. Increasing excise and / or custom duties lead to unwanted inflation as people cannot be forced to buy what they don’t want if it does not meet standard.
5. Reduce cost of production: Security, power, transportation; all have direct effect on cost of production. These are basic areas government must spend effectively to reduce production cost.
6. Last but not the least: Pray. After putting all measures in place, pray for Almighty God to grant the nation success.

At this point you don't want inflation. Many sellers are squeezed out of the market as demand drops, but cost of rent, transport and other business running costs remain fixed or may even rise.