Uzbekistan adopted upon independence in 1991, an import substitution development strategy, intended to transform the economy from heavy dependence on agriculture and natural resources, to a modern industrial economy, helping achieve some objectives, notably energy and food self-sufficiency, having sustained growth for the past six years. However, this report argues that important goals have not been met, and there are still significant opportunity costs, and risks to the development strategy. Priority reforms should be a decisive move to liberalize prices, production, marketing and distribution, coupled with the imposition of hard budget constraints. Given the need for a robust supply response, reforms need to be sufficiently comprehensive, and deep to allow for rapid re-alignment of productive factors. The initial liberalization would be followed by further institutional reforms, and restructuring in enterprise, banking, and energy sectors. Recommendations suggest the liberalization of the foreign exchange regime in conjunction with tight fiscal, and monetary policies, in order to raise bank interest rates to positive real levels. This leads to the necessary removal of barriers to foreign trade, by eliminating non-tariff barriers, and advance payment restrictions on imports, replacing export prepayment requirements with time limits on repatriation of exports earnings by domestic enterprises. Subsequently, the VAT should be refunded on all exports, and imports duty exemptions on inputs for exports, uniformly applied. Moreover, it is suggested to enhance price and market flexibility, to reduce significantly material balances, and phase-out completely the cash, and mandatory crop plans, to ensure that farms, and firms can respond to market price signals. Overall, this would foster an active commercial behavior by enterprises, strengthen social protection, and increase transparency.