Pope Leo XIV offered his first Sunday blessing in the loggia of St. Peter’s Basilica, calling for a cease-fire in Gaza and peace in Ukraine ahead of addressing the Vatican’s financial woes.
“I, too, address the world’s great powers by repeating the ever-present call ‘never again war,’” Leo told the estimated 100,000 worshippers in the square at the Vatican.
It was the first time that Leo had returned to the loggia since he first appeared to the world on Thursday evening following his remarkable election as pope, the first from the United States.
The conclave of cardinals had met less than two days to elect Leo as the successor of the late Pope Francis, apparently seeking to continue Francis’ legacy while uniting a polarized Catholic Church and financially strapped Holy See, observers said.
“I do think they wanted to elect someone with a good managerial hand,” Mathew Schmalz, professor of religious studies at the College of the Holy Cross, told The Washington Times. “Francis wasn’t really attuned to the worldly aspects of managing a large-scale institution. I think that hurt him.”
Pope Leo has stepped into the papacy with an urgent problem: The Vatican is staring down a $94 million budget deficit and an even deeper hole in its pension fund, despite years of cost-cutting and financial reforms under Francis.
“The great challenge that lies before the Vatican is that it’s slowly going broke,” Cardinal George Pell, Vatican Secretariat for the Economy under Francis, said in 2020. “Now that’s a bit of an exaggeration, but it’s slowly happening.”
One of Francis’ final directives before his April 21 death urged Catholics to donate more. In September, he ordered a timeline for a “zero deficit” budget, later warning of a “serious prospective imbalance” in the pension system and the need for “difficult decisions.”
Despite its vast art and real estate holdings, the Vatican relies heavily on museum ticket sales (about 7 million visitors a year) to fund its global operations, according to the Wall Street Journal. The Holy See collects no taxes, and many of its treasures are listed at a symbolic 1-euro (about $1.13) in value, which obscures the true cost of upkeep and insurance.
Meanwhile, the pension fund’s shortfall was pegged at roughly $690 million in 2022 by the Holy See’s top financial officer, according to the Reuters news agency. While the Vatican has not released a more recent estimate, insiders say the gap has likely grown.
Francis slashed cardinal salaries, ended housing perks and pushed for a balanced budget — but deeper reform proved elusive, the Journal reported. Internal departments resisted oversight, and auditors were ousted. Computers were reportedly tampered with, too.
Libero Milone, a Deloitte accounting executive hired by Francis to perform an external audit, was forced to resign in 2017 after uncovering broad mismanagement.
During the years Mr. Milone worked for the Vatican, his office was burgled. He later claimed that his resignation letter had been pre-written.
“There have been bad actors who’ve mismanaged investment funds,” a Catholic source close to the Vatican who requested anonymity told The Times. “And the Vatican Bank hasn’t been well run for years.”
Massive financial scandals piled up. In 2023, Archbishop Giovanni Angelo Becciu — once one of Francis’ closest aides — was convicted of embezzlement and fraud over a $400 million London property deal.
The archbishop is free pending appeal, while similar cases fester in the Vatican’s financial history.
Francis’ tenure began with hope for reform. He created the Secretariat for the Economy and appointed Cardinal Pell to lead it. But he has quickly encountered institutional stonewalling, according to reports.
“None of the last three popes had the CEO-type skill set the Vatican really needs,” Mr. Schmalz said. “John Paul II was a charismatic leader, Benedict was an intellectual, and Francis was like a parish priest. None had strong administrative instincts or knew who to delegate financial decisions to.”
In response to the arrival of Mr. Milone, the auditor, some clergy transferred funds into accounts under a cardinal’s name and hid cash in bags. And Mr. Milone was reportedly taken aback to find the church’s bookkeeping methods to be as ancient as they ever were: Nuns were still managing ledgers by hand, in pencil.
Mr. Milone flustered Vatican officials when he requested records on 750 million euro ($844 million) in Secretariat of State investments — half tied to real estate. He was denied access by then-Archbishop Becciu’s office.
The new papacy
Pope Leo is expected to change the norms around the Vatican’s financial mismanagement. The first American pope comes with a rare résumé: parish priest, missionary in Peru, bishop, head of a religious order and prefect of the Dicastery for Bishops — one of the most powerful offices in the Curia.
“That was the telling quality that made him electable,” Mr. Schmalz said. “He had Vatican experience, but also a rich background with people. And when you run the Dicastery for Bishops, you get to know how the church really works and where cuts can be made.”
Unlike Francis, who centralized power in the Secretariat of State, the Chicago-born pontiff is seen as more likely to delegate, according to Catholic outlets like The Pillar and Crux.
“From what I hear, he’s a level-headed guy who can make hard choices,” Mr. Schmalz said.
Vatican observers say they expect the new pope to revive stalled financial reforms: forcing departments to comply with audits, merging redundant offices, and possibly shrinking the Vatican workforce, the Church’s finance watchers are saying. Leo may also push for more professional lay involvement, including financial experts with corporate experience.
And money troubles won’t stay in Rome. Cardinal Michael Czerny, who oversaw humanitarian outreach under Francis, warned that budget constraints could derail the Church’s global mission.
“Those of us who live and work here are obviously all too aware,” Cardinal Czerny told The Wall Street Journal. Cardinals entering the conclavereceived a “thorough report” on the Vatican’s finances.
“I am concerned because of the effects on our mission, our staff, our programs,” he added.
Other church leaders think the financial matter doesn’t deserve the attention it’s suddenly getting.
“Jesus sent the Apostles and later the bishops into the world to preach the Gospel of salvation, redemption, hope to everybody. This remains the main issue for the Church,” Cardinal Gerhard Ludwig Muller told the Journal. “The other questions (the financial state of the Vatican) it’s not so important for the essence.”
But the church has found itself a leader with programmatic savvy and the ability to work quietly in solving institutional problems, Mr. Schmalz told The Times.
“Pope Leo’s not flashy. But he knows how the machine works. and right now, that may be exactly what the Church needs,” he said.
• This article is based in part on wire service reports.
