Published by Global Banking & Finance Review®
Posted on February 27, 2025
7 min readLast updated: January 25, 2026
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Pope Francis tackles Vatican's financial issues, forming a new commission to address budget deficits amid resistance from cardinals before his hospitalization.
By Joshua McElwee
VATICAN CITY (Reuters) - Before he was hospitalized for double pneumonia, Pope Francis was battling firm resistance from some of his own cardinals about how to plug a widening gap in the Vatican's finances.
Three days before his hospitalization, Francis ordered the creation of a new high-level commission to encourage donations to the headquarters of the 1.4-billion-member Catholic Church.
The new "Commission on Donations for the Holy See", announced by the Vatican on Wednesday as Francis was spending his 13th day in hospital, was formed after the pope faced push back against his proposals for Vatican budget cuts from within the Roman Curia.
In a closed-door meeting late last year, Vatican department chiefs, including senior cardinals, argued against cuts and against the Argentine pope's desire to seek outside funding to fix the deficit, two officials told Reuters.
The officials asked not to be named due to the sensitive nature of the information.
Francis has been seeking to patch up the budget for several years. He has cut cardinals' salaries three times since 2021 and demanded a "zero deficit" agenda in September.
But his efforts appear to have had little impact.
Although the Vatican hasn't published a full budget report since 2022, the last set of accounts, approved in mid-2024, included an 83-million-euro ($87 million) shortfall, the two sources said.
Reuters was not able to verify the deficit figure independently.
While the Vatican has operated with a deficit for years by rebalancing accounts and drawing on the dividends from its investment income, the gap has grown significantly in recent years. In 2022, the gap reported by the Vatican was 33 million euros.
Two cardinals who oversee the Vatican's budget declined Reuters' requests for interviews and did not provide current budget information. The Vatican did not respond to a request for comment.
GROWING PENSION WOES
Adding to the budget concerns are growing liabilities within the Vatican's pension fund, which were estimated to total some 631 million euros by the Vatican's finance czar in a 2022 media interview.
There has been no official update to this figure, but several insiders told Reuters they believe it has ballooned.
"The budget problems are going to force the Vatican to do a lot of things it doesn't want to do," said Rev. Tom Reese, a Jesuit priest and commentator who has written about the Vatican's finances.
The Vatican may have to limit its charitable works or down-size its diplomatic presence at embassies across the world, he said.
"The footprint of the pope could be severely reduced," said Reese. "If you can't pay your bills, you can't do much."
Reuters could not determine the precise reasons behind the Vatican's growing budget shortfall. The Vatican suffered a substantial loss of tourist income during the Covid pandemic. And in October, the pope also said there would have to be cuts to the at-least 40 million euro budget for the Vatican's extensive multi-language media operations.
Although the Vatican is the headquarters of the global Catholic Church, it generally controls only its own budget. In most cases, individual dioceses and religious orders control their own finances.
Addressing the budget woes at the recent meeting, the pope suggested that Vatican offices could seek outside funding to balance their expenses or ward off staffing cuts, according to the two officials who spoke to Reuters.
Several cardinals questioned the wisdom of such a move, arguing it could trigger conflicts of interest for Church, the sources said.
Reuters could not determine what funding sources the pope wants Vatican offices to tap. Several insiders said that wealthy Catholic foundations in the U.S. and Europe, which are typically run independently and determine their own funding priorities, could provide a valuable source of income.
The new high-level commission announced on Wednesday was given the task of encouraging donations from lay Catholics, national bishops conferences, "and other potential benefactors".
LIMITED INCOME STREAMS
The pope appointed a new administrator for the Vatican's pension fund in November, and warned its operating structure may need to change, without providing further details. The fund has not made its accounts public.
Many public pension funds have underestimated how long retired employees will live, throwing off their budget calculations. In 1960, Italy's average life expectancy was 69 against 83 in 2022. It is not clear if the Vatican has made any adjustment to take this into account.
"If you get the life expectancy assumptions wrong, that could be a huge problem," said Gregory Kearney, a researcher at Stanford University who has studied failing state pension funds in the U.S.
The Vatican, a microstate within Rome, has limited fiscal options. It does not issue debt, sell bonds, or levy taxes. A 2010 monetary agreement with the EU limits the Vatican to only issuing a fixed amount of euro coins each year, initially set at a sum of 2.3 million euros.
The global Catholic headquarters instead has three main income streams. It takes donations through the pope's official fund. It has an investment portfolio, which includes stock investments and more than 5,000 properties, the vast majority in Italy. And it makes money from admissions to the Vatican Museums.
The museums suffered a major decrease in income during the Covid pandemic from 2020 to 2022, due to extended lockdowns in Italy, but visitors have flooded back since 2023.
The Vatican reported a profit of 45.9 million euros on its investments in 2024. It did not say whether it was selling any assets, but said 35 million euro of the profit came from better management of rental properties.
Donations to the Vatican have been relatively stable, averaging around 45 million euros over the past decade, with spikes of 74 million euros in 2018 and 66 million euros in 2019.
However, Ed Soule, a business professor at Jesuit-run Georgetown University in Washington, worried that wealthy Catholic donors could start withholding donations if they felt they were being used for underfunded pension liabilities rather than charitable work.
"Some donors would look at this and say I'm not really interested in using my money to fund your unfunded pension," he said. "It's just not the sort of thing that gets people excited."
HOPES FOR JUBILEE
The pope's budget woes come as the Vatican is anticipating a record number of visits by tourists in 2025, as part of the ongoing Catholic Holy Year, also known as a Jubilee. Some 32 million tourists are expected over the year.
Many of the tourists will pay for admission to the museums, which costs at least 20 euro. "That will no doubt bring in a lot of money into the Vatican's coffers," said J.F. Pollard, a British historian who has written about the Vatican's finances.
But only a portion of that income will help fill the budget deficit, as the museums must also pay its own staff and cover costs for exhibits and its extensive conservation and restoration works.
Reese said the Jubilee would not bring in enough money to fill the deficit. "It's not like the pope is charging $1,000 per pilgrim," he said.
The pope, who is 88 and has been hospitalized several times in recent years, may decide to sell off some of the Vatican's investment portfolio to cover the deficit, the Jesuit priest suggested.
Any sell-off would provide immediate income but reduce future investment profits.
"That postpones the problem for some future pope," said Reese. "Whether it will be the next (pope) or the one after, there will be a day of reckoning."
($1 = 0.9525 euros)
(Reporting by Joshua McElwee; Editing by Crispian Balmer and Daniel Flynn)
Pope Francis is tackling a widening budget deficit and growing pension liabilities within the Vatican, which have been exacerbated by a decrease in tourist income during the Covid pandemic.
He established the 'Commission on Donations for the Holy See' to encourage donations from lay Catholics and other potential benefactors to help address the financial challenges.
The Vatican's budget deficit has reportedly grown significantly, with an 83-million-euro shortfall noted in the last budget report, which has not been updated since 2022.
The Vatican anticipates a record number of tourist visits in 2025 due to the Holy Year, which could generate significant income, although it may not be enough to cover the existing budget deficit.
The Vatican's pension fund faces increasing liabilities, estimated at 631 million euros, and there are worries that the fund's operating structure may need to change to address these financial challenges.
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