2025 Public Sector Perspectives

Karim Soubra Public Sector Banking, Sovereign Advisory and Solution Rohit Jamwal Public Sector Sales Head, JANA & South Asia, Treasury & Trade Solutions S tate-owned enterprises (SOEs) have reemerged as key players in strategic sectors since the turn of the century. Their assets were estimated to be worth around $45 trillion, equivalent to 50% of global GDP. 1 Where once most SOEs were purely domestic in nature, many now play a crucial role in advancing national interests while expanding globally. Their international ambitions, particularly in sectors like energy, often align with national strategies such as energy security. SOEs are better equipped than private firms to withstand financial and regulatory uncertainty and absorb costs as they expand internationally. However, global operations add complexity: careful management of key treasury and financial practices relating to treasury management, cash forecasting, regulations and compliance, and the challenges posed by a changing global payments landscape is essential. Key challenges associated with internationalization • Inefficient Payment Processes: Global expansion, especially where it results fromM&A activity, can leave organizations with multiple payment systems and processes. For many SOEs, rapid growth in trading with subsidiaries has led to disparate, inefficient inter- company transaction processes. • Limited Bank Account Visibility: Maintaining an accurate, up-to-date view of all bank accounts across subsidiaries is challenging and time-consuming, particularly when multiple banks are involved. Treasury staff often spend significant time managing accounts rather than focusing on strategic treasury tasks. • Imbalances in GroupWorking Capital: Decentralized cash is a common challenge for SOEs. While some subsidiaries may hold cash in local bank accounts, others negotiate loans with various local banks. This leaves the group treasurer – responsible for global cash management –caught in the middle, trying to optimize working capital for the entire organization. Decentralized cash management can lead to unnecessary banking fees, and foreign exchange transactions conducted locally can be more costly than those handled centrally by the treasury. Going Global: Best Practices for State- Owned Enterprises 1 https://www.imf.org/en/Blogs/Articles/2020/05/07/blog-state-owned-enterprises-in-the-time-of-covid-19 Citi Perspectives for the Public Sector 59