In his final weeks, Pope Francis worked to leave his successor a cleaner slate. Holed up in his modest office, he met with advisors who laid out a grim financial picture: the Vatican was sliding deeper into a paralyzing deficit. Its pension fund alone faced $2 billion in liabilities it couldn’t afford to pay.
After a month of increasingly frail deliberations, Francis opted for a single solution — asking the faithful for more money. On February 11, he signed a papal directive urging increased donations. Three days later, he was hospitalized with double pneumonia. He died on April 21.
The Vatican, one of the most secretive bureaucracies in the world, has long kept its financial dealings behind closed doors. Francis made some effort to bring transparency but died knowing he hadn’t succeeded in reforming a culture that preaches radical humility yet struggles to practice it.
A secretive institution drowning in debt
Francis repeatedly urged clergy to live modestly, slashed the salaries of the Vatican’s roughly 250 cardinals three times and in early 2023 announced an end to subsidized housing for senior officials. But those were minor cuts compared to the mounting debts.
The Vatican, a city-state with no tax revenue, welcomes seven million visitors annually and has increasingly relied on ticket sales to its museums to fund its public services, diplomatic network and the Swiss Guard — a small army financed partly through pension reserves.
Last week, The Wall Street Journal published a rare investigation into the Vatican’s finances. The three journalists behind it encountered extreme difficulty penetrating the institution’s walls. They met, sometimes in secret, with officials from the Vatican Bank, the pension fund and cardinals who had just participated in the recent conclave.
One senior financial official refused to speak in detail until he was assured the reporters weren’t recording him — he claimed a cardinal on trial for embezzlement had once secretly taped the pope himself.
Francis was elected in 2013 in part on a mandate to clean up Vatican finances. Within weeks, he assembled a global panel of cardinals for advice.
An internal report warned him that the pension fund was in trouble: about one-third of it was tied up in poor real estate investments, employees weren’t contributing enough and the fund faced liabilities of up to €1.5 billion (about $1.6 billion) — a number that has since grown steadily without meaningful reform.
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What Francis hadn’t anticipated was the fierce resistance. He established a new Secretariat for the Economy and appointed Jean-Baptiste de Franssu, a former Invesco Europe CEO, to run the Vatican Bank.
De Franssu shut down thousands of accounts and purged clients suspected of laundering money or evading taxes. Francis also appointed a professional auditor to modernize the books, prompting some clergy to transfer Vatican funds into private accounts or hoard cash in shopping bags.
The auditor, Italian accountant Libero Milone, was shocked to find nuns keeping ledgers in pencil on paper. His office was even broken into once. Milone’s team ran training sessions for clergy who pushed back against new rules like getting pre-approval for large expenses. Some priests tried to hide funds, arguing that disclosure could endanger missionaries working in countries where proselytizing is a crime.
Most Vatican departments ignored the challenge of balancing the city-state’s budget. Over time, Francis turned his attention elsewhere. Meanwhile, the pension fund fell further behind. Two years ago, a real estate scandal involving $400 million ended in a cardinal’s conviction for embezzlement and fraud.
Rich in art, poor in cash
The deeper problem is how to run a tiny sovereign state that's cash-poor but asset-rich. The Vatican Museums are filled with masterpieces. The Vatican Library holds over a million rare books and manuscripts, including some of the oldest Greek texts of the Bible.
Yet these treasures are irrelevant to the city’s day-to-day finances — there’s no intention of ever selling them. Official ledgers list artworks like the Sistine Chapel at €1 apiece, symbolizing their inestimable value. It’s the right approach but insuring and maintaining them costs a fortune.
This results in a miniature state of immense wealth unable to fund basic functions without sliding into dangerous deficits. Despite having one of the world’s highest percentages of financial professionals per capita, its budget is controlled by clergy more fluent in the New Testament than in balance sheets.
Most of the Vatican’s workforce is unmarried, with no dependents — yet last November Francis warned that the pension fund would be unable to meet its obligations “in the medium term.”
“Five-alarm fire is what I tend to hear from people,” Ed Condon, editor of the Catholic news site The Pillar, told The Wall Street Journal. “Some very, very unpleasant decisions are going to have to be made.”
Those decisions now fall to Leo XIV — a baseball-loving pope with a mathematics degree from Villanova University — who may need to bring some ruthless capitalism to his deep compassion.