Uzbekistan's spiraling inflation as a member of the ruble zone necessitated the introduction of a transition currency after it left the ruble zone in November 1993. In 1994, the government undertook economic reforms, but privatization efforts have fallen short of expectations. Subsidies for basic consumer goods (except some food staples and energy products) and subsidized credit to industrial enterprises were substantially reduced during 1994 and 1995. In response, the budget deficit fell from a high of 16% of GDP in 1993 to 3.3% in 1995, but had escalated to nearly 7% by 1997. The external debt, $1.5 billion at the end of 1994, more than doubled to $3.3 billion by 1997. An enterprise profit tax, a value-added tax, and an excise tax on cotton supply the bulk of government revenues.
The government is officially committed to a gradual transition to a free-market economy, but is cautious in the actions it takes toward that goal. The restrictive trade regime has crippled the economy and currency converability is essentially unheard of.
The US Central Intelligence Agency (CIA) estimates that in 1999 Uzbekistan's central government took in revenues of approximately $4 billion and had expenditures of $4.1 billion. Overall, the government registered a deficit of approximately $100 million. External debt totaled $5.1 billion.