Before his hospitalization for pneumonia, Pope Francis faced significant opposition from within the Catholic Church regarding how to address the growing financial deficit. Days before being admitted to the hospital, he established a new commission aimed at boosting donations to the 1.4-billion-member Catholic Church. Despite efforts to cut costs and seek external funding, the Vatican continues to struggle with budget shortfalls. The gap has widened significantly in recent years, reaching 83 million euros in 2024, up from 33 million euros in 2022. Additionally, concerns over the Vatican’s pension fund liabilities add to the financial strain. While the upcoming Jubilee year is expected to bring in more tourists, it may not be enough to resolve the financial issues.

Addressing the Vatican's Budget Deficit

Pope Francis has been grappling with the Vatican's widening budget gap, which has grown substantially in recent years. Despite implementing cost-cutting measures, including salary reductions for cardinals and demanding a "zero deficit" agenda, the financial challenges persist. The pope's initiatives to address these issues have met resistance from senior officials within the Roman Curia, who oppose further cuts and external funding strategies. To combat the shortfall, Francis recently established a high-level commission tasked with encouraging donations from lay Catholics and other potential benefactors.

The Vatican's financial troubles are not new but have intensified over the past few years. In 2024, the reported deficit reached 83 million euros, a significant increase from the 33 million euros reported in 2022. Although the Vatican typically balances its budget through internal rebalancing and investment income, the growing gap suggests that these methods may no longer suffice. The reluctance of some cardinals to accept proposed solutions, such as seeking outside funding or implementing deeper cuts, complicates efforts to stabilize the finances. The Vatican's limited fiscal options, including its reliance on donations, investments, and museum admissions, further constrain its ability to generate revenue.

Tackling Pension Fund Liabilities and Future Prospects

Adding to the Vatican's financial woes is the escalating burden of its pension fund liabilities. Estimated at 631 million euros in 2022, insiders believe this figure has likely increased. The Vatican's pension fund faces challenges similar to those of many public pension funds, particularly concerning life expectancy assumptions. If these assumptions are inaccurate, it could lead to substantial underfunding. Addressing this issue may require restructuring the fund's operations, though specifics remain unclear.

The Vatican's limited sources of income—donations, investments, and museum admissions—are insufficient to cover the growing financial demands. The upcoming Jubilee year offers hope for increased tourism revenue, but experts doubt it will fully resolve the deficit. Some suggest the Vatican may need to consider selling off parts of its investment portfolio, which could provide immediate relief but reduce future profits. Long-term solutions, however, remain elusive, raising concerns about the sustainability of the Vatican's financial model. Ultimately, the financial pressures may force the Vatican to reconsider its charitable works and diplomatic presence, potentially reducing the pope's global influence.