Pope Francis’s recent hospitalisation for double pneumonia got here amidst a struggle to deal with the Vatican’s growing financial deficit, facing resistance from inside the Church hierarchy.
Just three days before his admission, the Pope established a recent commission geared toward boosting donations to the Holy See.
Announced on Wednesday, in the course of the Pope’s thirteenth day in hospital, the “Commission on Donations for the Holy See” follows internal pushback against proposed budget cuts.
Senior cardinals and Vatican department chiefs voiced their opposition to the cuts during a personal meeting late last 12 months.
They also resisted the Pope’s suggestion of looking for external funding to alleviate the deficit, in response to two officials who spoke to Reuters on condition of anonymity.
Francis has been looking for to patch up the budget for several years. He has cut cardinals’ salaries thrice since 2021 and demanded a “zero deficit” agenda in September.
But his efforts appear to have had little impact.
Although the Vatican hasn’t published a full budget report since 2022, the last set of accounts, approved in mid-2024, included an €83-million (£68 million) shortfall, the 2 sources said.
Reuters was not in a position to confirm the deficit figure independently.
While the Vatican has operated with a deficit for years by rebalancing accounts and drawing on the dividends from its investment income, the gap has grown significantly lately. In 2022, the gap reported by the Vatican was €33 million.
Two cardinals who oversee the Vatican’s budget declined Reuters’ requests for interviews and didn’t provide current budget information. The Vatican didn’t reply to a request for comment.
Growing pension woes
Adding to the budget concerns are growing liabilities inside the Vatican’s pension fund, which were estimated to total some €631 million by the Vatican’s finance czar in a 2022 media interview.
There has been no official update to this figure, but several insiders told Reuters they consider it has ballooned.
“The budget problems are going to force the Vatican to do numerous things it doesn’t wish to do,” said Rev. Tom Reese, a Jesuit priest and commentator who has written concerning the Vatican’s funds.
The Vatican can have to limit its charitable works or downsize its diplomatic presence at embassies the world over, he said.
“The footprint of the pope could possibly be severely reduced,” said Reese. “If you may’t pay your bills, you may’t do much.”
Reuters couldn’t determine the precise reasons behind the Vatican’s growing budget shortfall. The Vatican suffered a considerable lack of tourist income in the course of the Covid pandemic. And in October, the pope also said there would must be cuts to the at-least €40 million budget for the Vatican’s extensive multi-language media operations.
Although the Vatican is the headquarters of the worldwide Catholic Church, it generally controls only its own budget. In most cases, individual dioceses and non secular orders control their very own funds.
Addressing the budget woes on the recent meeting, the pope suggested that Vatican offices could seek outside funding to balance their expenses or ward off staffing cuts, in response to the 2 officials who spoke to Reuters.
Several cardinals questioned the wisdom of such a move, arguing it could trigger conflicts of interest for Church, the sources said.
Reuters couldn’t determine what funding sources the pope wants Vatican offices to tap. Several insiders said that wealthy Catholic foundations within the US and Europe, that are typically run independently and determine their very own funding priorities, could provide a helpful source of income.
The recent high-level commission announced on Wednesday was given the duty of encouraging donations from lay Catholics, national bishops conferences, “and other potential benefactors”.
Limited income streams
The pope appointed a recent administrator for the Vatican’s pension fund in November, and warned its operating structure may have to vary, without providing further details. The fund has not made its accounts public.
Many public pension funds have underestimated how long retired employees will live, throwing off their budget calculations. In 1960, Italy’s average life expectancy was 69 against 83 in 2022. It isn’t clear if the Vatican has made any adjustment to take this into consideration.
“If you get the life expectancy assumptions mistaken, that could possibly be an enormous problem,” said Gregory Kearney, a researcher at Stanford University who has studied failing state pension funds within the US.
The Vatican, a micro-state inside Rome, has limited fiscal options. It doesn’t issue debt, sell bonds, or levy taxes. A 2010 monetary agreement with the EU limits the Vatican to only issuing a hard and fast amount of euro coins annually, initially set at a sum of two.3 million euros.
The global Catholic headquarters as an alternative has three most important income streams. It takes donations through the pope’s official fund. It has an investment portfolio, which incorporates stock investments and greater than 5,000 properties, the overwhelming majority in Italy. And it makes money from admissions to the Vatican Museums.
The museums suffered a significant decrease in income in the course of the Covid pandemic from 2020 to 2022, as a consequence of prolonged lockdowns in Italy, but visitors have flooded back since 2023.
The Vatican reported a profit of €45.9 million on its investments in 2024. It didn’t say whether it was selling any assets, but said €35 million of the profit got here from higher management of rental properties.
Donations to the Vatican have been relatively stable, averaging around €45 million over the past decade, with spikes of €74 million in 2018 and €66 million in 2019.
However, Ed Soule, a business professor at Jesuit-run Georgetown University in Washington, anxious that wealthy Catholic donors could start withholding donations in the event that they felt they were getting used for underfunded pension liabilities relatively than charitable work.
“Some donors would take a look at this and say I’m not likely taken with using my money to fund your unfunded pension,” he said. “It’s just not the kind of thing that gets people excited.”
Hopes for Jubilee
The pope’s budget woes come because the Vatican is anticipating a record variety of visits by tourists in 2025, as a part of the continuing Catholic Holy Year, also referred to as a Jubilee. Some 32 million tourists are expected over the 12 months.
Many of the tourists can pay for admission to the museums, which costs a minimum of €20. “That will little doubt herald numerous money into the Vatican’s coffers,” said J.F. Pollard, a British historian who has written concerning the Vatican’s funds.
But only a portion of that income will help fill the budget deficit, because the museums must also pay its own staff and canopy costs for exhibits and its extensive conservation and restoration works.
Reese said the Jubilee wouldn’t herald enough money to fill the deficit. “It’s not just like the pope is charging $1,000 per pilgrim,” he said.
The pope, who’s 88 and has been hospitalised several times lately, may resolve to dump among the Vatican’s investment portfolio to cover the deficit, the Jesuit priest suggested.
Any sell-off would offer immediate income but reduce future investment profits.
“That postpones the issue for some future pope,” said Reese. “Whether it is going to be the subsequent (pope) or the one after, there will probably be a day of reckoning.”
