Pope tells cardinals to tighten belts as Vatican struggles to sort its finances

Pope Francis continues to push for his long-running goal of financial reform at the Vatican. He has addressed the Church’s cardinals and asked them to tighten their belts, help the Vatican seek new resources and exhibit an ethos of generosity, all towards the goal of a “zero deficit”.

In a letter to the College of Cardinals signed 16 September and published on 20 September, Pope Francis spoke of his 10 years trying to overhaul the Roman Curia, the Vatican’s central governing bureaucracy, which culminated with the publication in 2022 of Praedicate Evangelium that outlined the new structure and roles of Vatican departments and their officials.

“Despite the difficulties and, at times, that temptation of immobility and rigidity in the face of change, the results achieved in these years have been many,” he said, and thanked the cardinals for their role and support in his reform efforts.

The Pope said he would now like to focus on one of the topics that received the most attention in the general congregations prior to the 2013 conclave that elected him, namely, “the financial reform of the Holy See”.

“The past years have demonstrated that the requests for reform urged in the past by many members of the College of Cardinals have been far-sighted and have allowed us to acquire a greater awareness of the fact that the economic resources at the service of the mission are limited and must be managed with rigor and seriousness,” Pope Francis said.

This, he added, must be done in order to ensure that “the efforts of those who have contributed to the patrimony of the Holy See are not wasted”.

For this reason, he explained, “a further effort is now required from everyone so that a ‘zero deficit’ is not just a theoretical objective, but an actually achievable goal”.

Francis said the curial reforms he has carried out so far have laid the groundwork for “ethical policies” that improve the financial performance of existing assets, and he urged the institutions of the Holy See to seek external resources to cover operating costs, while ensuring transparency and responsibility.

Pope Francis said the Church must set an example in cost reduction, “so that our service is carried out with a spirit of essentiality, avoiding the superfluous and carefully selecting our priorities, encouraging mutual collaboration and synergies”.

To this end, he urged those who are better off financially to help those who are in need, saying entities with a surplus “should contribute to cover the general deficit”.

“This means taking care of the good of our community, acting with generosity, in the evangelical sense of the term, as an indispensable prerequisite for asking for generosity also from the outside,” he said.

Pope Francis closed by asking the cardinals to welcome his message with “courage, a spirit of service, and to support the ongoing reforms with conviction, loyalty and generosity”.

The Pope’s plea comes after several embarrassing financial scandals have rocked the Vatican in recent years.

Last year a mega-trial featuring the first-ever cardinal to be indicted and charged by the Vatican’s own court, Italian Cardinal Angelo Becciu, came to a close after more than a year. The trial centred around a $400 million investment into a London real estate venture that ended up costing the Vatican over $200 million.

The scandal surrounding the London property deal exposed both the incompetence of the Vatican officials managing the Holy See’s money, as well as the corruption of some of its business associates, with monsignors inside the system signing away controlling shares while agreeing to pay inflated fees to disreputable Italian financiers.

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In recent years the Institute of Religious Works (IOR), also known as the Vatican Bank, has also faced pressure over the seizure of some $33 million in assets by three companies who sued the IOR over its withdrawal from an investment deal.

Many new laws implemented by the Pope came amid the COVID-19 lockdown in 2020, as Francis faced increased pressure over a mounting economic crisis, including significant debts to the Vatican’s pension fund as well as pressure from European financial watchdogs pushing the Vatican to show improvement in the prosecution of financial crimes.

In 2020 alone, the Pope named a new director for the Vatican’s Financial Information Authority, he fired five employees believed to have been involved in the London property deal, and he held various meetings with Vatican department heads to address the Vatican’s financial situation and outline potential reforms.

He also shut down a slew of holding companies based in Switzerland which had been created to manage various portions of the Vatican’s investment portfolio and real estate holdings.

That spring, the Pope transferred the Vatican’s “Center for the Elaboration of Data”, which is essentially its financial monitoring service, from the Administration of the Patrimony of the Apostolic See (APSA) to the Secretariat for the Economy, in bid to create a stronger distinction between administration and oversight.

Francis then issued a new procurement law applicable to both the Roman Curia and the Vatican City State which, among other things, barred conflicts of interest, mandated competitive bidding procedures, required evidence that that contract expenditures are financially sustainable, and centralised control over contracting.

In august of that year, he also issued an Ordinance from the President of the Governorate of Vatican City State requiring volunteer organisations and juridical persons of the Vatican City State to report suspicious activities to the Vatican’s financial watchdog entity, the Financial Information Authority (AIF).

Later, in early December 2020, Francis issued new statutes transforming AIF into the Financial Supervision and Information Authority (ASIF), confirming its oversight role for the so-called Vatican bank and expanding its responsibilities.

Francis then established a “Commission for Reserved Matters” determining which economic activities remain confidential. The commission itself, which covers contracts for the purchase of goods, property, and services for both the Roman Curia and Vatican City State offices, was part of new transparency laws enacted by the Pope in June of that year.

In December of that year, the Pope announced the creation of the “Council for Inclusive Capitalism with the Vatican”, a partnership between the Holy See and some of the world’s largest investment and business leaders, including CEOs from Bank of America, British Petroleum, Estée Lauder, Mastercard and Visa, Johnson and Johnson, Allianz, Dupont, TIAA, Merck and Co., Ernst and Young, and Saudi Aramco.

The Pope also issued new legislation stripping the Secretariat of State of its ability to independently manage the hundreds of millions of dollars that the Holy See receives annually in donations and investments, transferring that power to APSA.

Those funds are now consolidated by APSA into the Holy See’s consolidated budget, while the Secretariat for the Economy oversees spending.

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Photo: Cardinals attend a consistory to create 21 new cardinals at St. Peter’s square in the Vatican, Vatican City State, 30 September 2023. (Photo by FILIPPO MONTEFORTE/AFP via Getty Images.)

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