How many dollars the Pope has: how the Vatican is in a financial crisis
For European countries, budget deficit problems and even the threat of bankruptcy have become commonplace. Greece avoided default in the 2010s only after direct intervention of the EU and IMF. Right now in France the government has fallen because of debts and deficit (probably not for the last time). But it is not only big countries that are in the trend, but also microstates such as the Vatican. The Holy See has the same difficulties as secular rulers: lack of revenue, sequestration of spending and the danger of default. How the heart of the Catholic Church found itself dangerously close to financial insolvency - in the material of "Izvestia".
Deficit after deficit
The Vatican since the beginning of the century has experienced more than one financial scandal. Suffice it to recall "Vatilex" 2012 - events in which among other things mentioned contracts concluded at clearly inflated prices. Later, other dubious activities were uncovered - for example, investments in London real estate, on which the Holy See lost about $200 million, or payment for the "services" of a woman who offered to free Catholic nuns taken hostage. In fact, the lady used the money to lead a lavish lifestyle.
However, these kinds of corruption stories haunt virtually any organization, including religious ones. By themselves, they are unlikely to undermine its solvency. Financial problems of a more serious scale for the Vatican began, as in many countries, in 2020, with the onset of the coronavirus epidemic.
In total, the Vatican has four main sources of income. The first is funds from asset management, including hospitals, real estate, deposits, and so on. The second is donations from the various dioceses of the Roman Catholic Church, as well as from organizations and individuals. The third is access fees to Vatican museums, other proceeds from tourism, and the sale of stamps, coins, and other symbolic products. The fourth and smallest is the Denarius of St. Peter, once mandatory but now a voluntary tribute to the church.
In 2020, a sharp decline in revenue was expected for almost all areas, but most notably for tourism. During the lockdown period, the number of visitors and pilgrims to the Vatican fell to almost zero. The result was a 20% drop in revenue for the Holy See. The following year brought no relief - revenue fell to €256 million, or 30% less than in the pre-crisis 2019.
The 2022 budget followed a different methodology and included numerous organizations and controlled institutions that had previously been counted separately. The formal growth of revenues turned out to be more than double, but the situation with the deficit became even worse. It was planned at the level of $37 million, but in the end it turned out to be twice as much (and it became known already in 2024, since the year-end estimates of income and expenditures were not published) - and even the return of tourists did not change the situation. However, it was a difficult year for the whole of Europe, and Italy and the Vatican were no exception.
However, things did not improve in 2023 either. The operating deficit grew again by €5 million, reaching €83 million. There is little doubt that 2024 will not bring relief either, although some financial statistics will not be available until the first months of next year. Most worrying of all is the unsecured future debt of the Holy See's pension fund, now at €631 million - a sum comparable to all annual revenues.
Costs under the knife
When the conclave chose Pope Francis in 2013, getting the Vatican's finances in order was a top priority. The pontiff rolled up his sleeves, cutting costs wherever possible. Up until now, things were going "in the right direction," but then came Coovid-19, and all the efforts largely went to waste. In 2021-2022, it became clear that to ensure the financial solvency of the Holy See, we need stronger measures.
In 2022, in order to optimize the Vatican's investment activities, Francis decided to transfer all the money belonging to the Holy See to the so-called "Bank of the Vatican" (IOR), which is not a classical credit institution. This was due to numerous frauds and failed investments made by clerics through European banking systems. Say, a failed real estate purchase was made through the Swiss Credit Suisse (effectively bankrupt due to extremely unsuccessful core business, absorbed by its former main competitor in Switzerland, UBS).
Pope Francis
Even earlier, Francis imposed an austerity regime in the Vatican, not much different from similar measures in the "big" countries of the world. In particular, he reduced the salaries of all cardinals by 10%, the maintenance of clerics was reduced by 8% and that of novices and nuns by 3%. In addition, housing for both clergy living permanently in Rome and Catholic priests (up to cardinal rank) was cut.
But this policy has its costs. In 2022, Francis dismissed Jesuit Father Juan Antonio Guerrero Alves, who was in charge of the Holy See's financial secretariat, appointing the layman Maximo Caballero Liedo in his place. Liedo, unlike his predecessor, was immediately skeptical about the possibility of solving the Vatican's financial difficulties once and for all. In particular, he pointed out that in order to balance the budget, up to 50 organizations funded by the Papal Curia would have to be closed, which is politically impossible. Thus, the only option for effective action is to increase revenues.
An emergency sale
But how to do this? Transferring assets to the Vatican Bank has helped somewhat with the quality of their management, and the organization is even profitable - but it's not enough. Financial reformers propose a different solution: take an inventory of the property and land on the Holy See's balance sheet to find some secular use for them at a substantial fee (land in Rome and Italy in general tends not to be cheap). But Francis and his entourage have rejected all these proposals, calling their initiators - priests and laity - alarmists and radicals.
While these resources are still there and can still be used, it will take time to extract liquidity from them. And it may not be enough, as a full-blown liquidity crisis looms on the horizon. At some point it will be necessary either not to pay salaries to the priesthood at all, including cardinals, or to start an emergency sale of assets. That will only increase the panic surrounding the Vatican's financial situation.
There is little hope for an increase in donations right now. In some important donor countries, such as Germany, the demographic and economic crisis is consistently reducing the revenues of local RCC dioceses. In other cases, more politics and ideology come into play: locally, not everywhere is happy with what Pope Francis is preaching. The conservative priesthood is very angry with a left-liberal pope. This is especially true in relations with American Catholics who are unwilling to pay for the pontiff's activities of which they disapprove.
All of this only exacerbates the financial crisis. It is possible that at some point the Vatican will have to seek help from the secular authorities in Italy (where it is a matter of national pride to have the Holy See in Rome, after all) or even some other Catholic country.
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