Will Pope Leo XIV be able to bring order to the Vatican’s finances

What is the state of Vatican finances?

The Vatican's finances are in a critical state, despite Pope Francis's efforts to eradicate corruption. The new Pope Leo, who holds an academic degree in mathematics, faces an extremely difficult task — eliminating the growing financial deficit.

Toward the end of his life, Pope Francis faced a paradoxical situation: while possessing priceless art treasures, the Vatican was sinking deeper into debt. The pontiff's final decision was to call on the faithful to increase donations, but shortly after signing the relevant decree on February 11, he was hospitalized with pneumonia and passed away in April, leaving the crisis to his successor.

It's important to understand that the Vatican controls only its own budget, not the budget of the Catholic Church in other countries. It does not collect taxes or issue debt obligations on which it could earn interest, such as bonds or loans. Its revenue in 2022 (770 million euros) was distributed as follows:

· 65% — income from real estate and institutions (papal schools and hospitals in Rome)

· 30% — donations (averaging 45 million euros per year or $51 million, with a peak of 66 million euros in 2019 - $75 million)

· 5% — proceeds from the Vatican bank and tourism (which suffered during the pandemic)

Other income, such as museum tickets, barely covers the expenses for maintaining embassies and the Swiss Guard (a small army paid in Swiss francs).

The Vatican has not published a complete financial report since 2022. However, the latest set of accounts approved in 2024 for audit purposes showed an operating deficit of 83 million euros ($94 million), significantly exceeding the deficit of 33 million euros ($38 million) recorded in 2022.

The Vatican's growing financial problems are explained by rising operational expenses, including salaries, security, and building maintenance. In addition, the Holy See's pension fund also shows a significant deficit.

Why is there a deficit in the Vatican's pension fund?

According to estimates by the Vatican's Secretariat for the Economy, the fund's deficit in 2022 amounted to 631 million euros ($717 million). No official updates on this figure have been provided.

In past decades, many workplace pension funds underestimated how long retirees would likely live. For example, in 1960, the average life expectancy in Italy was 69 years, compared to 83 years in 2022. This means that many pension funds did not properly prepare for the full amount they might have to pay a former employee over their actual lifetime, and consequently accumulated significant deficits.

The pension crisis is not the Vatican's first financial problem. Over recent decades, the Holy See's finances have repeatedly been at the center of scandals. These include a failed London real estate deal that ended with multi-million-dollar losses and a corruption investigation, the collapse of Banco Ambrosiano in 1982, as well as allegations of questionable financial operations in the post-war period.

What financial reforms did Francis implement?

In 2019, Francis led an anti-corruption campaign during which police raided the Vatican's bureaucratic apparatus, resulting in the State Secretariat being stripped of its investment powers.

In addition to removing five Vatican employees from office, the investigation led to the conviction of Cardinal Giovanni Angelo Becciu, once an influential figure, on numerous charges of embezzlement and fraud.

In the months before his death, Pope Francis expressed particular concern about Vatican finances. In September 2024, he urged cardinals to follow a "zero-deficit" program and improve the Vatican's use of its economic assets.

Then in October, he ordered the third cut in three years to Vatican cardinals' income. Several Vatican department heads opposed the cuts and spoke out against the pope's plans to seek external funding to eliminate the deficit, two senior officials reported at the time.

Thus, the late Francis was able to create momentum for financial reform. In 2021, the Vatican bank received the highest possible rating from European monitor Moneyval for its anti-money laundering and anti-terrorism standards. However, Francis ultimately failed to eliminate the church's deficit, and his successor will face serious financial challenges.

What could the next Pope do?

Pope Leo was a loyal ally of Francis and may be able to continue the reform program, including reducing the Vatican's global diplomatic presence, and consequently, enormous expenses.

However, it remains to be seen whether he will support reforms as far-reaching as his predecessor's and whether he can actually balance the Vatican's accounts.

The material is based on an Al Jazeera article.

Earlier, Kazinform News Agency reported that Robert Francis Prevost was elected as the 267th pope.