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VATICAN CITY (Reuters) – Prior to his hospitalization for double pneumonia, Pope Francis was confronting significant opposition from several cardinals regarding his plans to address the escalating financial challenges faced by the Vatican.
Just three days before he was admitted to the hospital, the Pope initiated the formation of a new high-level commission aimed at boosting donations to support the operations of the Catholic Church, which encompasses 1.4 billion members worldwide.
The Vatican announced the establishment of the “Commission on Donations for the Holy See” on Wednesday, marking the announcement as Francis spent his 13th day in treatment. This commission was created in the context of Francis encountering resistance within the Roman Curia against his suggestions for budgetary reductions.
During a private meeting held late last year, high-ranking officials within the Vatican, including some senior cardinals, voiced their objections to cuts that the Argentine Pope proposed. They also resisted the idea of seeking external funding to address the budgetary shortfall, as relayed by two unnamed officials.
Pope Francis has been working to resolve the Vatican’s financial issues for several years. Since 2021, he has instituted salary cuts for cardinals on three occasions and outlined a “zero deficit” goal in September.
Despite these efforts, tangible progress appears limited. The Vatican has not released a comprehensive budget report since 2022; however, the most recent financial accounts indicated a shortfall of 83 million euros (approximately $87 million).
Although this figure could not be independently substantiated, previous reports indicated that the shortfall had increased from 33 million euros in 2022. The Vatican has routinely balanced its budget by adjusting accounts and drawing on investment income, yet the fiscal gap has widened in recent years.
Cardinals responsible for the Vatican’s budget declined to disclose information regarding current financial status when approached for interviews, and the Vatican itself has not commented on these issues.
PENSION SYSTEM CHALLENGES
An additional concern for the Vatican’s finances is the growing liabilities related to its pension fund, which were reported to be approximately 631 million euros in a 2022 interview with the Vatican’s financial overseer. Insiders have suggested that this figure may have since risen.
Rev. Tom Reese, a Jesuit priest and commentator on Vatican finances, remarked that the ongoing budgetary issues will compel the Vatican to undertake actions it would prefer to avoid, possibly including reducing charitable initiatives and downsizing its diplomatic presence globally.
Reese warned, “The pope’s influence may be significantly diminished. If financial obligations cannot be met, operational capacities become restricted.”
Several factors could be contributing to the Vatican’s expanding financial troubles. Notably, it suffered a large decrease in tourist revenue due to the Covid-19 pandemic, and the Pope has recently indicated that cuts may need to be made to the 40 million euro budget assigned to its extensive multilingual media operations.
While the Vatican operates as the core of the Catholic Church, it primarily manages its finances, with local dioceses and religious organizations maintaining their own fiscal responsibilities.
In a recent meeting addressing the financial concerns, the Pope floated the idea of Vatican offices pursuing external funding sources to help stabilize costs and prevent staffing reductions. However, several cardinals expressed doubt about the prudence of this approach, citing potential conflicts of interest.
Although it remains uncertain which funding avenues the Pope intends to explore, insiders speculated about possibly leveraging affluent Catholic foundations in the United States and Europe, which typically operate autonomously and designate their own funding goals.
The newly formed commission has been tasked with promoting donations from lay Catholics, national bishops’ conferences, and other prospective benefactors.
CONFINEMENTS ON REVENUE
In November, the Pope appointed a new administrator for the Vatican’s pension fund and suggested that its operational framework might require revision, albeit without providing specific details. The fund’s financial details have yet to be disclosed publicly.
Public pension systems have often underestimated the life expectancy of retirees, skewing budget assessments. For context, in 1960, Italy’s average lifespan was 69 years compared to 83 years in 2022. There remains ambiguity surrounding whether the Vatican has adjusted for these statistics.
Given its unique status as a microstate, the Vatican faces limitations in its financial options; it cannot issue debt, sell bonds, or levy taxes. A monetary agreement established in 2010 with the European Union restricts the Vatican to issuing a capped quantity of euro currency annually, initially set at 2.3 million euros.
The Vatican’s financial structure relies on three primary income streams: donations funneled through the papal fund, an investment portfolio comprising stocks and over 5,000 properties (predominantly in Italy), and revenues from admission to the Vatican Museums.
The museums notably experienced a significant dip in revenue during the pandemic due to extended lockdowns, but visitor numbers have surged since 2023.
In terms of profitability, the Vatican reported a profit of 45.9 million euros from its investment activities in 2024, although the institution did not specify whether any asset sales contributed to this figure. It noted that 35 million euros of profit stemmed from improved management of rental properties.
Donations to the Vatican have remained consistently stable, averaging around 45 million euros annually over the past decade, with notable peaks of 74 million euros in 2018 and 66 million euros in 2019.
However, concerns remain regarding the potential impact on donor behavior. Ed Soule, a business professor at Georgetown University, cautioned that affluent Catholic contributors might reconsider their financial support if they sensed that their contributions were being allocated to cover pension deficits rather than charitable initiatives.
“Donors could find the prospect of funding unfunded pension liabilities rather unappealing,” he stated. “It’s not a cause that typically excites charitable giving.”
PROSPECTS FOR JUBILEE
The Pope’s current financial hurdles coincide with forecasts of an exceptional influx of tourists in 2025, linked to the forthcoming Catholic Holy Year, or Jubilee. An estimated 32 million visitors are expected to attend throughout the year.
A considerable portion of these tourists will likely pay for museum admissions, which begin at a minimum of 20 euros. J.F. Pollard, a historian specializing in Vatican finances, suggested that this influx could provide substantial revenue.
Nonetheless, only a fraction of this revenue will contribute to alleviating the budget shortfall, as the museums themselves have employee salaries and other operational costs to cover.
Some experts opine that the anticipated Jubilee will not generate sufficient funds to rectify the deficit. “It’s unrealistic to presume the pope is charging $1,000 per pilgrim,” noted Reese.
Given the Pope’s advanced age and recent health challenges, there are speculations regarding the potential sale of parts of the Vatican’s investment portfolio to address the fiscal imbalance, as suggested by Reese.
While such divestiture might provide immediate financial relief, it could compromise long-term investment profitability.
“This would merely defer the obligation to a future papacy, whether it be the next or the one after,” Reese concluded. “A day of reckoning looms.”
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