The Vatican

Vatican finances, what do the balance sheets of the IOR and the St. Peter's Obligation say?

Between late spring and early summer, the Holy See publishes the annual balance sheets of its most important economic entities.

Andrea Gagliarducci-July 3, 2023-Reading time: 6 minutes

St. Peter's Basilica ©CNS photo/Cindy Wooden

The figures published are important for understanding the state of Vatican finances, which were going through a moment of crisis even before the pandemic that affected the economy of the small state. Between the end of May and the end of June, the balance sheets of the Institute for the Works of Religion and of the St. Peter's Pence were published. These balance sheets can be read together, cross-referencing the data, to get a more complete picture of the situation.

What are the Óbolo di San Pedro and the Institute for the Works of Religion?

Before going into details, however, it is necessary to give some explanations. The Institute for the Works of Religion, or IOR, is a financial institution of the Holy See. It is erroneously described as the "bank of the Vatican," but in reality it does not have all the services of a bank and, above all, it has no branches outside the Vatican City State. Its purpose is to hold the financial deposits of certain specific categories of persons - from Vatican employees to Holy See embassies and religious congregations - and to ensure the protection and proper use of these deposits.

The Oblong of St. Peter, on the other hand, has more ancient origins, dating back even to the Acts of the Apostles. But it was actually the Anglo-Saxons, in the eighth century, who began to send a permanent contribution to the Holy Father, the Denarius Sancti Petri, which soon spread to European countries. Pius IX blessed this practice, which then spread to several European countries, with the encyclical Saepe Venerabilis of August 5, 1871. It was a necessary practice, because it served to support the Holy See, which had been left without assets after the capture of Rome in 1870. Although the use of the obolus has diversified over time, support for the Holy See remains the main purpose of the collection.

IOR balance sheet

The most interesting aspect of the IOR's balance sheet concerns the TIER 1 figure, i.e. the main component of a bank's capital. According to a common reading, the IOR was impoverished by certain financial operations, among which the investment of the Secretariat of State in a building in London stands out. On that occasion, the Secretariat of State had requested a loan from the IOR, which had denied it. It was 2019, and TIER 1 was at 82.40 %. But the latest balance sheet, that of 2022, speaks of a TIER of 46.14 %. In 2021, it was at 38 %. An improved figure, no doubt. But it still shows a reduction of capital by half.

Compared to 2021, there are more employees (there were 112), but far fewer clients: in 2021, the IOR had 14,519 clients. Given that the screening of accounts considered not compatible with the IOR's mission has long since ended, the first impression is that the IOR is no longer an attractive place for its first clients, namely religious institutions.

In 2022, the IOR made a net profit of 29.6 million. A significant increase compared to last year, although the downward trend seems to be prolonged since 2012, when profits reached 86.6 million. In 2013, profits had been 66.9 million, in 2014 69.3 million, and those were the years when savings reserves were still being used. Then, in 2015, the report showed a profit of only 16.1 million euros. Everything then stabilized at a profit threshold around 30 million: 33 million in 2016, 31.9 million in 2017, a drop to 17.5 million in 2018, a return to 38 million in 2019 and 36.4 million in 2020. In 2021, the first post-pandemic year, profits were only 18.2 million.

The profits in 2022, however, should also include the 17.2 million euros seized from former IOR president Angelo Caloia and Gabriele Liuzzo, who were held accountable for embezzlement and self-laundering committed in connection with the process of divesting the huge real estate assets owned by the Institute and its subsidiaries, SGIR and LE PALME. The convictions of Caloia and Liuzzo are final as of July 2022, and, if their indemnities had been budgeted, we would still be talking about an actual profit of less than 20 million euros.

Not a very prosperous situation, to tell the truth. Of these profits, 5.2 million euros were distributed: 3 million for the Pope's religious works, 2 million for the charitable activities of the Cardinal's Commission, 200,000 euros for charitable activities coordinated by the prelate of the Institute.
The funds for charitable works fluctuate: the Fund for Holy Masses amounts to 1347 million euros in 2022, while in 2021 it was 2219 million euros, registering a drastic drop; the Fund for Missionary Works, on the other hand, rises from 89 million in 2021 to 278 in 2022.

These are the main figures of a balance sheet that must face the international crises, but which also pays for the divestment of old investments. The justification is that now the "ethical" criterion is preponderant in the institution's choices, and that it only invests in so-called "Catholic" funds. However, it cannot be said that previous investments were not Catholic or were excessively speculative.

In fact, to be fair, there has been an increase in speculative investment since 2013, at the beginning of what has been characterized as the management of the IOR under Pope Francis.

St. Peter's obolus

The St. Peter's Obolus is not in very good condition either, and this is also due to the fact that the international crisis is impacting the offerings that the faithful send to Rome. In addition, there are media campaigns suggesting that the money from the Obolo has been used for speculative activities, especially by the Secretariat of State.

The truth is that the Obligation was created precisely to support the Curia, that is, the Pope's mission, and that it is intended only secondarily for the Pope's direct charity.

The details of this recently published annual report are interesting.

Some numbers from the annual disclosure, presented only with the numbers for 2022, but with no possibility of comparison with those for 2021: the Óbolo fund disbursed 93.8 million euros in 2022. Of this, 43.5 million came from the offerings received in 2022, while the other 50.3 million came from real estate management. In practice, cash was made by selling some real estate owned by Óbolo.

The revenues of the Obolo in 2022 were 107 million euros, and only 43.5 million came from donations, which came from the collection of Saints Peter and Paul's Day, but also from direct donations and inheritances. As mentioned above, 77.6 million went to support the activities of the Holy See (70 dicasteries, agencies and organizations), and this is not surprising, because this was the initial destination of the collection, which has very ancient origins and was revitalized in the 19th century, after the fall of the Papal States, precisely to support the Holy Father. The remaining 16.2 million, on the other hand, were destined to direct aid projects for the most needy.

The most interesting figure, however, is obtained by looking at the 2021 data. The 2021 annual disclosure stated that the Obolo contributed 55 million to the Vatican dicasteries' 237.7 million in expenditures. In 2022, however, the Óbolo contributed 20% of the expenses of the dicasteries, sending 77.6 million. The expenditures of the dicasteries, therefore, amount to 383.9 million, almost 150 million more than last year.

A more complete picture

To have a more complete picture of the Vatican's economic situation, we will have to wait for the balance sheet of the Administration of the Apostolic See (APSA), the so-called Vatican "central bank" that now manages all the funds, and then that of the Curia, the so-called "mission budget". It will have to be seen, in particular, how savings or cuts have been made, and whether there have been new consultancies that have increased costs.

There is also great expectation to know the budget of the governorates, which has not been published for some time. The budget also includes the revenues of the Vatican Museums. These have been badly affected by the closure due to the pandemic, but remain the largest direct source of income for the Holy See.

Certainly, the financial situation is not flourishing, but it is difficult, in this dance of numbers, to understand how much is due to the mistakes of the previous management, which was also the subject of some lawsuits at the Vatican. Especially because the previous management, numbers in hand, generated more profits.

It will take time to have a precise definition of the financial status of the Holy See, in short.

And then, reforms will have to be made, starting with the Pension Fund, which will serve to guarantee pensions for the next generation as well.

The authorAndrea Gagliarducci

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