2026 Perspectives for the Public Sector

II. SOE Reforms: Case Studies Within the framework of international best practices for SOE management, structural reorganization, enhanced governance, and fiscal transparency emerge as critical pillars for reform. The experiences of the countries highlighted below offer valuable insights into the implementation of various reform approaches and notably have contributed to better sovereign ratings. Slovenia Following the global financial crisis, Slovenia faced a severe economic reckoning exacerbated by systemic weaknesses in its large SOE sector. Relatively poor SOE governance and opaque cross-ownership structures led to inefficient capital allocation, losses, and the accumulation of contingent liabilities. The situation culminated in the 2012-2013 banking crisis, where the mostly state-owned banking system faced a surge of non-performing loans, many of which were extended to interconnected SOEs. In response, Slovenia embarked on a reform program centered on professionalizing the state’s role as an owner. A critical feature of this effort was the establishment of a centralized holding company to manage and divest state assets, moving away from a fragmented model where line ministries exerted operational control. This improved oversight began to untangle the cross-ownership networks that had amplified the banking crisis, and moreover was complemented by a new corporate governance code that separated the state’s ownership functions from its policy making and regulatory roles. To instill financial discipline, the government introduced profitability targets, such as an 8% return- on-equity goal by 2020, and implemented a predictable dividend policy mandating a payout of at least one-third of net profits. Enhanced transparency measures also aimed to improve SOE reporting standards. The strengthened financial oversight and performance targets stemming from these reforms helped stabilize public finances by reducing the risk of SOE debts materializing as sovereign liabilities, ultimately improving the sovereign credit rating over time. Oman The Omani economy’s high dependence on hydrocarbons exposes both public finances and SOEs to volatile oil prices. This became a binding constraint after the 2014 oil price crash, leading to sharply widening macroeconomic imbalances and a rapid accumulation in sovereign debt. Furthermore, SOE ownership was dispersed between the Ministry of Finance and various line ministries, creating conflicting objectives and blurred accountability. Oman responded to the crisis by enacting a transformative agenda encompassing the landmark consolidation of SOE ownership under the Oman Investment Authority (OIA) in 2020. This created a centralized, professional ownership entity separate from regulatory functions and stream- lined decision-making. Under the OIA’s umbrella, the “Rawabet” programwas launched, implementing a suite of specific measures: a comprehensive Code of Governance for all OIA affiliates mandating board independence, skills matrices, and term limits; the development of a performance management framework using KPIs and balanced scorecards to hold boards accountable; and the introduction of a robust, centralized procurement and tendering policy. Concurrently, a major divestment strategy was unveiled, targeting over 35 assets between 2022-2026 to raise OMR 2.6 billion (USD 6.8 billion) — a policy that has already seen early successes, reflected in the heavily over-subscribed IPO of Abraj Energy Services in 2023. The collective impact of these reforms has reduced fiscal risks from SOE contingent liabilities, improved capital allocation, reoriented the SOE portfolio towards meeting the Oman Vision 2040 goals and helped to strengthen the sovereign credit rating. Uzbekistan Since 2018, Uzbekistan has made notable progress in reforming its SOEs, a central pillar of the government’s broader economic modernization agenda. The authorities have focused on improving governance, transparency, and efficiency within major SOEs — particularly in the energy, mining, and transport sectors —while gradually reducing the state’s dominant role in the economy. Large entities such as Uzbekneftegaz, Uzbekenergo, and Uzbekistan Airways have undergone restructuring to enhance financial discipline and operational autonomy. These efforts, coupled with a growing push for privatization and the introduction of international audit standards, have led to more accurate disclosure of contingent liabilities and improved fiscal oversight. The gradual hardening of budget constraints on SOEs has also helped curb quasi-fiscal losses, strengthening the overall transparency and credibility of the public sector balance sheet. These efforts have also led to an improvement in the country’s sovereign credit profile. Within the framework of international best practices for SOE management, structural reorganization, enhanced governance, and fiscal transparency emerge as critical pillars for reform. Citi Perspectives for the Public Sector 31