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New report suggests long-term concerns for Vatican finances
A new analysis of the Vatican’s financial situation by an Italian media outlet contains both good and bad news for papal finances, pointing to relative success in efforts to curb growing deficits, but also seemingly irreversible long-term declines.
According to an overview of the most recent financial data published July 26 by La RepubblicaItaly’s most widely read daily newspaper, the Vatican’s annual operating deficit grew by about $5.4 million in 2023, a smaller figure than in previous years. The report suggested the result was due to the impact of spending cuts as well as efforts to generate more realistic assessments of the value of Vatican properties.
Cost-cutting measures adopted in recent years include new limits on hiring and contracting, as well as efforts to raise rents charged on some Vatican properties that are commercially leased and put others up for sale.
The report cited a recently completed financial statement approved by the Vatican’s Council for the Economy, led by German Cardinal Reinhard Marx. According to the report, the deficit for 2023 reached more than $90 million, with revenue of $1.25 billion and expenses of $1.34 billion.
Revenue in 2023 grew by $30 million, according to the financial statement, but expenses also increased by $36 million due to the impact of inflation.
The statement also indicated that the size of the 2023 deficit could still decline somewhat, depending on how the actual performance of the Vatican’s investment portfolios matches projections.
Repubblica’s analysis also found that income from the annual Peter’s Pence collection, which supports the pope’s works, reached $52.5 million in 2023, up from $47.2 million in 2022.
However, the net gain from the collection was offset by the fact that the fund’s reserves were again used in 2023 to support the Roman Curia, the Vatican’s main administrative bureaucracy, to the tune of nearly $98 million.
Furthermore, the long-term trend in the fund’s income is clearly downward. According to Repubblica’s analysis, collections fell by 23% overall from 2015 to 2019, and are poised for further reductions.
To some extent, these declines may be linked to financial scandals, such as the aborted $400 million purchase of a former Harrods warehouse in London, which resulted in criminal convictions for fraud against nine figures, including Italian Cardinal Angelo Becciu. Given that Peter’s Pence is also sometimes seen as a referendum on the popularity of the current pope, various controversies surrounding Franci may also have had an impact.
More fundamentally, however, most observers believe that the main factor is that much of Peter’s Pence income derives from wealthier nations, where Catholic populations, and therefore Catholic giving, have been in decline for decades.
Declines in income are especially worrisome for Vatican accountants today, given concerns about an aging workforce and unfunded pension obligations in the future. There is also alarm that rising costs and declining income could eventually force the Vatican to cut its payroll or salaries, or both, at a time when both the volume and complexity of the workload around the world are increasing rapidly.
The financial statement allegedly approved by the Council for the Economy concerns the Holy See and primarily excludes the Government of the Vatican City State, which is responsible for the administration of the physical territory – including income, for example, from the Vatican Museums – and also excludes the Institute for the Works of Religion, the so-called “Vatican bank”, which in 2023 reported $33.2 million in income and a total of $5.9 billion in client assets.
However, it is considered unlikely that income from the city-state or the IOR will be sufficient in the coming years to offset the Vatican’s wide deficits, making it unclear at the moment how the losses will be sustained.