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.
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.
Minutes of past Council for the Economy meetings show that there was little obvious shortage of information and recommendations being given to the body but, even at the high water mark of the early Francis reforms, there seemed to be a real lack of urgency.
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.
In 2023, the current staff were instructed to exercise “merciful discretion” when dealing with instances of corruption, saying that financial scandals “serve more to fill the pages of the newspapers than to correct behavior in depth.”
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.
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.
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.
But despite being a considerable landowner, as of 2022, only about a fifth of the Vatican’s property portfolio was actually available for generating revenue.
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 ferrualas 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.
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