During the days leading up to Pope Conclave, Robert Francis Prevast, 69, concluded Thursday with the election of Pope Leo XIV, editor of Catholic Church Specialist News Outlet Crocs.
“Essentially, Cardinal has three qualities that they look for whenever they have to kick a tire to the Pope. They want missionaries, people who can look for positive faces in their faith, politicians, people who can stand on the world stage along with Donald Trump, Vladimir Putinz, Vladimir Putinz, Vladimir Putinz, Vladimir ginping, and XI ginping of the world. Crisis.”
“There’s a solid debate, inscribed in all three boxes,” concluded John L. Allen Jr.
The Vatican finances were certainly confused, and Pope Francis went into the troublesome issue of stamping corruption, but he was unable to rule out the Vatican financial deficit. So, clearing up the Vatican’s troubling finances could be a major challenge for Pope Leo, who holds a mathematics degree.
Which state is the Vatican financed?
The Vatican manages only its own budgets, not the Catholic Church budgets of other countries, and its sources of income are limited. We do not raise interest-earning taxes, such as bonds and loans, or issue debts.
Instead, most Vatican income comes from the vast Italian real estate holdings in Rome and clergy schools and hospitals. Together, these generated 65% of the Holy See’s 770 million euros ($875 million) revenue in 2022. This is the latest number available.
That year, about 30% of the revenue came from donations. This has been relatively stable for the past decade, with an average annual average of around 45 million euros ($51 million) and in 2019 it has increased to 66 million euros ($75 million).
The remaining 5% of Vatican revenue in 2022 came from Vatican Bank, where Catholic organizations and church employees maintain accounts, and the Tourism Bureau, which has declined during the Covid-19 pandemic.
The Vatican has not released a full financial report since 2022. However, the final set approved for audit purposes in 2024 showed an operational deficit of 83 million euros ($94 million).
The increasing financial problems at the Vatican are attributed to rising operating costs, including pay, security and maintenance costs. In addition to this, there is also a major deficit within Holy See’s pension fund.
Why is there a shortage in the Vatican pension fund?
The fund’s deficit was estimated at 631 million euros ($777 million) by the Vatican Economic Office in 2022. There was no official update for this number.
Over the past few decades, many workplace pension funds have underestimated how long retired employees will live there. For example, in 1960, the average life expectancy in Italy was 69 compared to 83 people in 2022. This means that many pension funds are building a significant shortage as they are not properly prepared for the full amount that they have to pay for the actual life of former workers.
It is not clear whether the Vatican Retirement Fund for Employees (defined benefits schemes) means committing to paying a fixed income to retirees regardless of the funds they have. However, in November, the Pope warned that he would not be able to meet his debts in the medium term.
“The data shows a serious positive imbalance for the fund, whose magnitude tends to grow over time in the absence of intervention,” Francis said in a letter to the Cardinals University. “This means that the current system cannot guarantee the fulfillment of future generations of pension obligations in the medium term.”
Last year, the Pope appointed Cardinal Kevin Farrell, a new administrator, a Vatican-based Irish-American clergyman, to suggest that the pension fund’s operating structure needs to be changed but no details were provided. Funding a shortage of pension funds will be difficult. For example, churches may oppose using donations. This is because they are generally made with specific charitable causes in mind.
Why is the Vatican finances in chaos?
After spending around 350 million euros ($398 million) through a series of complicated transactions to acquire the gorgeous London property between 2014 and 2018, the Holy See suffered a public backlash.
To move on from the fuss over the spending, the Vatican sold the building in 2022 for a loss of 140 million euros ($159 million). The deal sparked questions about the Vatican’s uncertain finances, which ultimately led to the corruption trial of Cardinal Angelo Bexil, who oversaw the contract.
The Vatican has also been caught up in other financial scandals. Most notoriously was the collapse of Banco Ambrosiano, Italy’s largest private bank, in 1982, causing the Vatican to lose about $250 million. At the time, the Vatican had close business with the powerful bank chief Roberto Calvi.
Calvi’s body hangs from Blackfriars Bridge in London and is found his hands tied behind his back before it becomes clear that he is a party with a plan to wash his money through offshore companies, transfer illegal payments to Italian political parties, and fund illegal arms deals.
During World War II, the Vatican was accused of washing up money and looting money and money that had been plundered by Jews and other victims of Adolf Hitler’s Nazi regime.
What kind of financial reforms did Francis oversee?
In 2019, Francis led the anti-corruption guiding with police attacks on the Vatican’s own bureaucracy, and the National Secretariat was stripped of its investment liability.
In addition to the suspension of five staff members in the Vatican, the investigation has convicted Cardinal Giovanni Angelo Bexiu, a once-strong figure, of multiple numbers of embezzlement and fraud.
A few months before his death, the Pope expressed particular concern about the Vatican finances. In September, he called on the Cardinals to pursue a “zero deficit” agenda and improve the use of the Vatican economic assets.
Then in October he ordered a third cut in the Vatican Cardinal’s three-year revenue. Several Vatican directors opposed the cut and opposed the Pope’s plan to seek outside funds to correct the deficit, two senior officials told Reuters at the time.
Francis was able to establish momentum for financial reform. In 2021, Vatican Bank received the highest rating from the European Watchdog Money Ball on anti-money laundering and anti-terrorist standards. But in the end, Francis will not be able to eliminate the church’s deficit, and his successor will face a horrific financial challenge.
What can the next Pope do?
Pope Leo is Francis’ ally and may be keen to push forward his reformist agenda, perhaps by reducing the Vatican’s global diplomatic presence. But it remains to be seen whether he is in favor of widespread reforms like his predecessors and whether he can truly balance the book.
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