A Vatican Observer Coronavirus, how much money did the Vatican lose?

May 5, 2020

As governments around the world work to assess and contain the effect of the coronavirus emergency on the economy and state finances, the Vatican is further tightening its belt.

The Vatican City State administration addressed a circular letter on April 8 to all the Vatican entities and departments. Protocolled AS / 06062 / 2020, the letter presented stringent expense-containment measures. However, this letter was not actually delivered. The Vatican City State administration then delivered another letter on Apr. 17, which confirmed the stringent expenses-containment measures. This second letter was Protocolled AS / 06215 / 2020.

The Vatican City State Administration asked for "a drastic cut in the expenses for consultancies" and for the "suspension, whenever possible, of fixed-term contracts."

Internally, the administration already has a "freeze on hiring and promotions" in place, and requires that "no overtime work" be justified, "except for unavoidable institutional reasons, which must then be absorbed with the flexibility of work time and shifts."

The Vatican City State also asks its departments to let employees enjoy their remaining vacation days and take days off to recuperate the extra time (in lieu of overtime pay).

Finally, the circular asks to cancel all the events already scheduled in 2020, included work-related trips and travel, and to freeze all planned purchases of new office furniture.

"The current COVID 19 health emergency is having serious repercussions on a global level, the circular reads, "and in the upcoming times it will have even more repercussions on the Holy See / Vatican City State economic/financial situation."

"The superiors of the Holy See and the Vatican City State administration," the letter continues, "are well aware that the full restoration of the activities will not take place in a short time, nor for the entities of the Roman Curia and neither for the directions/offices of the administration."

The letter also underscores that the Vatican would continue to pay salaries and is not going to fire anyone.

The drastic economic measures are also intended to contain the impact of the decision to cut rents to the shops currently in Vatican buildings. The Administration of the Patrimony of the Apostolic See (APSA) took the decision. The APSA is in charge of the management of the Holy See real estate.

In particular, the APSA administers 2,400 flats and about 600 offices and commercial premises. The overall value of the Holy See real estate is estimated to be between 2 and 3 billion euro.

The coronavirus crisis is strongly impacting the financial resources of the church: the general suspension of public Masses has caused massive economic loss for parishes everywhere.

The crisis is also taking an economic toll on the Holy See and the Vatican City State, with the Peter's Pence collection postponed to October 4 and the extraordinary collection for the Holy Land postponed to September 13.

Vatican City is the smallest State in the world. Vatican City has no GDP. All its economic activities are intended to support the life of the State and the activities of the Holy See.

Vatican employees are about 5,000, split between the Vatican City State administration and the Holy See. They all get a salary, generally modest. The Vatican City system provides rent-controlled housing, as well as a tax-free supermarket, shopping mall, and gas stations. The economic activity includes investments in real estate and some financial operations, to generate revenues and help the Holy See to carry forward its initiatives.

The coronavirus crisis will likely push the Vatican to review its investment policies to face the money loss.

It is tough to estimate from the outside how much the coronavirus emergency has cost the Vatican. Basing on some open data, it is likely that the Holy See / Vatican City State lost some 25 million euros (about 27 million dollars).  Most of this money is the missed revenues from the Vatican Museums. The Vatican also cut the rents of commercial activities in Vatican buildings. It is already time for a robust spending review in the Vatican.

The Vatican Museums have been closed since March 9. The Vatican is thinking about reopening the Museums, though with restricted access and enhanced health security measures. The reopening of Vatican Museums was one of the topics of the extraordinary meeting the Cardinal Secretary of  State, Pietro Parolin, held with the heads of Vatican dicasteries on April 22. 

It is complicated to assess the precise impact of the Vatican Museums on the Vatican  City State balance sheet. The latest balance sheet was published in 2017 and referred to 2015. The balance sheet was not formally approved by the Pope, who only "inspected" the document.

As usual, the balance sheet was split into that of the Holy See and that of the Vatican City administration. The balance sheet of the Holy See refers to the activities and expenses of the Roman Curia. Vatican City's balance sheet relates to the activities of the small Vatican territory, including the Vatican mall and supermarket, the Post Office, and the Vatican Museums.

As of 2015, the balance sheet of the Holy See had a €12.4 million deficit, while the balance sheet of Vatican City had €59.9 million in profits. According to a Vatican press release, the Museums generated the majority of the gains.

The release did not specify how much was the impact of the Vatican Museums in the Vatican City administration.

An approximate calculation based on the number of tickets sold suggests that the Vatican Museums bring some €101 million into the Vatican's coffers each year ($109.5 million). Two months of missed revenues amount to approximately €16,940,000. However, this number does not take into account the profits generated by the Vatican Museums shops and by individual tours.

The loss is pretty high, considering that the employees keep getting their salaries. For this reason, the Vatican City State administration initiated a drastic spending review.

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Following the restrictions of the Italian government to counter the coronavirus pandemic, the commercial activities have been shut down, and so they have had virtually no income during the last two months.

The APSA decided that, during March and April, the tenants in the commercial premises will have to pay just one-fourth of their rent. The second fourth of the rent is due within a year. The other half have been waived: one-fourth was waived by the Pope and another by the APSA. It seems that the APSA will likely prolong the provision since the shutdown of many shops will last at least for another few weeks.

It is yet to be assessed how much the crisis will impact donations to Peter's Pence and the Papal Almoner. Peter's Pence is collected every year, usually on the Feast of St. Peter and Paul (June 29). There are no recent official figures for the amount of the collection. According to the Wall Street Journal, as of 2018, the Peter's Pence amounted to €50 million.

The Holy See can also count on the profits of the Institute for the Works of Religion – IOR – the so-called Vatican bank. IOR profits in 2018 were €17.5 million, about half of the earnings of the previous year.

The negative trend of the IOR profits has been lasting for seven years now: in 2012, benefits were €86.6 million; in 2013, €66.9; in 2014, €69.3 million; in 2015, €16.1 million; in 2016, €33 million;  and in 2017, €31.9  million.

If the negative trend continues, it is unlikely the Holy See will be able to look to financial investments to fill the holes this crisis is opening.