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Governance of state-owned enterprises is an issue of increasing importance to policymakers in the region, as well as to the wider public. This is unsurprising considering the important contribution of SOEs to economic and social objectives, including their role as providers of goods and services, employment and key infrastructure (OECD, 2013). Although specific figures on the contribution of SOEs to national GDP (Gross Domestic Product), employment or investment are not generally disclosed, it is estimated that as much as 30 per cent of the regional GDP originates from SOEs (OECD, 2012).
When facing double digit contraction in real GDP in 2009 Estonia, Latvia and Lithuania realised that financial performance of state-owned enterprises (SOEs) and their dividend contributions to state budgets could become a viable alternative for raising taxes. Improving corporate governance practices was the key to unleash the profitability potential of SOEs.