On Pope Leo’s Desk: Fixing Vatican finances
The good news is the pope has the chance to think big, act fast,
and capitalize on enthusiasm in the first days of his reign, the bad news is
time is short.
May
13, 2025
When Pope Francis emerged on the
loggia in 2013, it was widely understood that the “pope from the peripheries”
had been elected with a mandate to reform the Roman curia, and especially to
clean up corruption.
Twelve years later, the morass of curial finances may not have
been top of many people’s list of expectations for Pope Leo XIV as he
introduced himself to the Church and the world, but it will be at the top of
the pile on the new pope’s desk.
If anything, the situation is even more acute than it was in
2013.
Francis acted big and bold in the
first years of his pontificate, issuing sweeping regulatory and legal changes
and erecting a host of new curial oversight and watchdog bodies to bring some
measure of control to what amounted to an often interdepartmental budgetary and
accounting free-for-all.
But, famously, the 2017 departures of his key lieutenants
Cardinal George Pell and Libero Milone saw the initiative stall, and a period
of institutional retrenchment set in.
The subsequent criminal investigation and trial of Cardinal
Angelo Becciu and others, resulting in convictions carrying millions in fines
and years in prison, did much to illustrate the seriousness of the problem, and
the potential effectiveness of his early reforms — if not exactly the smooth
turning of the wheels of justice in Vatican City.
But rooting out corruption and installing minimum standards of
best practice are a beginning, not an end, to calming the Vatican’s financial
turmoil, and despite a decade of warnings, little was ultimately done to
address a runaway structural budget deficit in the curia, or plug a ballooning
black hole in the Vatican’s pension fund.
The seriousness of the situation now
facing Pope Leo was underscored several times during the final months of the
Pope Francis pontificate, when the late pope issued a series of letters to the
College of Cardinals warning of the dire financial straits facing the curia and admitting the pension
fund would be unable to meet its obligations in the near future.
Pope Leo now faces the triple task of revivifying the structural
reforms instituted by Francis, reigning in Vatican spending, and finding new
sources of curial income, short and long term. And even though his pontificate
is less than a week old, the pope is working against the clock.
Bring reforms back to
life
The
three bodies most central to the early years of the Francis era reforms are the
Council for the Economy, a cardinal-led board meant to monitor curia-wide
financial affairs, the Secretariat for the Economy, an executive agency meant
to implement reforms and approve departmental budgets, and the Office of the
Auditor General, meant to police compliance.
All
three were instituted by Francis in his first years, and all three now look to
be in serious need of a refresh. The extent to which Leo is willing and able to
breathe new life and enthusiasm into them will be crucial to getting the
Vatican’s financial house in order.
Those
close to the body and its meetings relate that, while there was and remains
general buy-in for the notion of regulatory and financial reform, a sense of
urgency was lacking and there remained a default deference to dicasterial heads
and curial mandarins when they cautioned about going too far too fast.
Similarly,
since the departure of Cardinal Pell in 2017, the Secretariat for the Economy,
the theoretical engine to drive reform, appeared to almost totally run out of
steam.
A
succession of leaders have, far from appearing to drive change, appeared
relegated to cataloguing growing deficits and dwindling resources — and in that
they have even ended the halting steps towards financial transparency, like the
previous practice of publishing the Vatican’s annual budget.
If anything, the situation at the
Office of the Auditor General is even worse. With its former head, Libero
Milone, locked in a legal dispute with the
Vatican, and his former deputy having died during the
litigation.
Bringing Francis’ structural reforms to bear and back to life
will be crucial to the task of stopping the Vatican from sliding off a financial
cliff. That job could prove as simple and as difficult as refreshing the
leadership.
Unfortunately,
the job now is less “reform” and more “crisis management.” That will require a
prioritization of qualities not usually favored within the Vatican: radical
thinking, a willingness to make immediate and unpopular decisions, and the
impetus to act immediately and unilaterally if necessary.
Such
people do exist, of course. And the new pope will not want for willing hands if
he asks for them. The first challenge, though, will be for him to identify the
most effective and qualified collaborators on offer, and not allow himself to
be steered into “safe” choices.
Budget brakes
The
Vatican’s Secretariat for the Economy formerly published an annual mission
budget presentation, but has not done so since 2022. So it’s hard to pin down
any real assessment of how bad things really are for the curial coffers.
According
to the last published budget report, annual curial operations were in 2022 set
to cost 796 million euros per year, with a forecasted operating loss of 33.4
million after expected donations from sources including Peter’s Pence — which in 2023 allocated 90% of its revenue to Vatican
operating costs.
In
October 2023, the secretariat’s prefect, Maximino Caballero Ledo gave an
indication of the scale of the Vatican’s financial “crisis” when he said that
the Holy See had a structural budget deficit of “between 50 and 60 million
euros a year,” despite years of cost-cutting measures implemented by the Holy
See and a curia wide hiring freeze.
As part
of Pope Francis’ efforts to bring financial reforms to the Vatican, a
curia-wide pay and hiring freeze has been in place for nearly a decade — though
2021 budget reports show salaries remain the curia’s biggest single expense line
at 139.5 million euros, so Francis instituted senior level pay cuts for clerical
employees.
Early
in 2023, Pope Francis announced that he would end the practice of offering
subsidized Vatican accommodation to senior curial officials, citing “a context
economic crisis such as the current one, which is particularly serious,” which
the pope said highlighted “the need for everyone to make an extraordinary
sacrifice.”
These
reforms notwithstanding, it is widely acknowledged that the Vatican’s
structural budget deficit is growing, not shrinking, and Pope Leo will have to
think much bigger and bolder than hiring freezes and cuts to pay and perks to
arrest the situation.
In
October 2023, Caballero Ledo noted that if the Vatican were to cover its
deficit “only by cutting expenses, we would close 43 of the 53
entities that belong to the Roman Curia, and this is not possible.”
“So, we
have to work hard to increase revenues,” he said. On general principle, he’s
likely right. Many Vatican departments operate on a relative shoe string — at
least according to the last official figures released.
But
even allowing for the fact that the vast majority of curial entities operate on budgets of
less than 5 million euros annually, some cuts will probably have to
come, sooner or later. And while shuttering dozens of smaller departments is no
reasonable proposal, looking for saving in, say, the Dicastery for
Communications’ budget of some 40 million, might be.
Making money
Francis’
final economic reform, issued just days before he entered hospital for an
extended stay earlier this year, was to institute a new fundraising body for the Vatican, the Commissio de donationibus pro Sancta Sede, or Commission of Donations for the Holy See.
The
body was created just months after Francis had to order an overhaul of the
Vatican’s pension fund and issued a letter to the College of Cardinals
conceding that “the past years have shown that the demands for reform urged in
the past by so many… have been far-sighted.”
Far-sighted
they may have been, but after years of neglect to the Holy See’s income
generating operations and asset management, the future is now for the Vatican.
Throughout
the first years of the Francis pontificate, projects for developing under
performing Vatican assets into stable long term income streams were proposed,
discussed, and ultimately shoved in drawers according to internal documents.
Those
projects, like the suggested redevelopment of Santa Maria in Galeria,
a 1,000 acre site on the outskirts of Rome, were calculated to come
on line within a ten year window prior to the Holy See hitting an acute
liquidity shortage, which it is now approaching. Instead those
proposals were shelved in favor of other projects, like installing fields of
solar panels.
Big
thinking and long term planning are still essential to the Vatican’s financial
future. While the Vatican is most definitely not a business, the bulk of its
income (about 65%) is derived commercially, from returns on assets and investments,
including its sizable real estate portfolio, both in the city of Rome and
worldwide.
Pope
Leo arrives into his new role with a crucial window to win back the people who
tried for years to put the Vatican on a long term path to financial health, but
were left frustrated and frozen out by leadership ultimately afraid of radical
action.
But
even assuming Pope Leo begins immediately with the serious business of
long-term reform of the Holy See’s under performing asset portfolio, meaningful
returns will take years to come on line.
And
with a structural budget deficit approaching 100 million euros and an unfunded
pension liability believed to be close to 2 billion, Leo will need to kick
start the new Commissio de donationibus with a maximum of
personal papal support.
Giving
to Rome has been suppressed, at least to a degree, by the air of dysfunction
and corruption which came to overshadow Francis’ curia, despite his early
reforming efforts.
But
just as much, curial financial insiders pointed to the late pope’s image and
reputation for being suspicious of, if not outright hostile to, both potential
donors and the things that tend to attract donations in the first place.
Most
agree that the money is there to be given, though, and Leo may have already
done much to encourage a new influx of donations without even trying.
Already,
his appearances in traditional papal dress, like the mozzetta on the loggia,
the use of iconic ferulas from St. John Paul II and Benedict XVI, and the
expectation that he will return to the customary papal apartments have all
generated a buzz of a “return to normal” in some quarters.
Some
Francis-era policies, like the restrictions on individual Masses at the side
altars of St. Peter’s basilica, would be easy for Leo to row back, boosting
enthusiasm and donations at an instant. And the simple fact of the new pope’s
being American is likely to trigger an immediate influx of giving from his
native land — still far and away the biggest source of external revenue for the
Holy See.
No one
expects the new pope to think of himself as the Church’s primary fundraiser —
still less act like one. But the good news is that with a willingness to think
big, act fast, and capitalize on the universal enthusiasm of the first days of
his reign, Leo could accomplish a lot.
The bad
news is that the situation he has inherited leaves him little time to waste, or
room to maneuver.
https://www.pillarcatholic.com/p/on-pope-leos-desk-fixing-vatican
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