Vatican increasing ‘liquid’ assets as it faces financial impact of pandemic, economic officials say

Vatican City, Jul 24, 2021 / 09:40 am

The Vatican is working to maintain “‘pockets’ of precautionary liquidity” as it faces the financial fallout of the COVID-19 pandemic, two officials of the Roman Curia said Saturday.

On July 24, the Vatican’s Secretariat for the Economy and APSA (The Administration of the Patrimony of the Apostolic See) released consolidated balance sheets for the year 2020.

This was the first time APSA, which oversees the Vatican’s real estate holdings and other sovereign assets, presented a balance and details about its investment portfolio to the public.

Bishop Nunzio Galantino, head of APSA, told Vatican News July 24 that going forward, the Roman Curia’s “financial investment plan will remain prudential” and “characterized by a correct balance between risk and medium/long-term profitability.”

“However, in pursuing the investment policy, at such a particular moment due to the effects of the pandemic, which substantially reduced the Holy See’s revenues, it is necessary to maintain ‘pockets’ of precautionary liquidity -- already created in 2020 for future and unpredictable needs, especially for administrative and personnel expenses,” he added.

Speaking with Vatican News, economic chief Fr. Juan A. Guerrero, S.J., said knowing the Vatican’s cash flow during the pandemic, as well as the uncertainty of the financial situation, the economy council decided to increase liquidity to avoid the possibility of being forced to sell property in a bad market.

“We did not have precise information on the liquidity available to us, which led to the decision to increase liquidity,” he said. “This meant reducing our financial profit at the same time. I think it was the most prudent thing to do in the situation we were in.”

The balance sheet for the Roman Curia, which is separate from the budget of Vatican City State, showed a deficit of $78 million in 2020, down $13 million from the year prior.

The Roman Curia’s overall expenses for 2020 were $370 million.

In May 2020, Guerrero said the Vatican predicted it would face a 25% to 45% decrease in revenue in the fiscal year; earlier the same month, Italian newspaper Il Messaggero said an internal Vatican report projected an income reduction of at least 30%, and possibly as much as 80%.

In fact, according to the 2020 balance, the Vatican had just under a 50% decrease in revenue, which the report said was “driven by the significant reduction of Ordinary Operating Expenses,” which came to around $30 million and “partially ofsett [sic] by the less-than-expected reduction in Ordinary Operating Income.”

According to the balance, the disparity between 2020 and 2019 can be attributed in part to a loss in income of around $17.6 million from the governatorate of Vatican City State, which oversees some commercial activities forced to close during the pandemic, such as the Vatican Museums and catacombs.

The Vatican also received less income on properties where it offered reduced or delayed lease payments to tenants during the COVID-19 outbreak.

APSA’s sale of a large property in 2019 is also reflected in the difference between the two years, according to the budget.

By contrast, some entities related to the Holy See, such as the IOR, contributed more income to the Roman Curia in 2020. Overall, expenses were reduced by $3.88 million.

Guerrero told Vatican News the Holy See comes “from a culture of secrecy, but in economics we have learned that transparency protects us more than secrecy.”

He claimed the culture is changing and the institution is beginning to see itself as a caretaker, not owner, recognizing the accountability that calls for.

Releasing the 2020 balance “marks a turning point that can lead to greater credibility of the Holy See in economic matters,” he said.

“First of all, this process tells us about a past, a recent past, but a past,” he underlined. “There can always be mistakes, but today I do not see how the events of the past can repeat themselves.”

Galantino said that the activities APSA is carrying out go beyond “the serious consequences of the pandemic crisis.”

According to the bishop, 14% of the properties managed by APSA are rented at market value, while the remaining 86%, those with institutional uses such as work places for Vatican employees and residences for retired cardinals, charge no rent or are rented below market value.

APSA carried out a quantitative and qualitative update to the inventory of the buildings and land it administrates, he said, and found that many of the assets, both those rented to tenants and those used for institutional purposes, were in need of maintenance, modernization, and increased security.

He explained that APSA will also begin a renovation project on 100 apartments in January 2022, with a scheduled end date of sometime in spring 2023.

“Our energies are directed to a credible and reliable administration, as well as effective and efficient, allowing us to be guided by processes of rationalization, transparency and professionalism also required by Pope Francis,” he said.

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According to Italian news agency ANSA, the Secretariat for the Economy will begin implementing a new “pilot” review process of personnel in some offices.

ANSA reported that Guerrero had sent a letter to the heads of dicasteries saying the assessment of job performance is taking place in light of curial reform and “the need to make the most of deserving resources, to provide new opportunities and to promote technical and professional training.”

With the release of the 2020 balance, Guerrero told Vatican News that the economic secretariat wants “to ensure economic sustainability, while also maintaining the pope’s correct decision not to fire anyone.”

He added that “to generate greater motivation in the staff, it would be useful to make a plan with a long-term vision and to have a work policy with professional development programs and formation, and particular attention to formation in the mission that is carried out in the Holy See. This would also save money in the long run.”