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Fr Guerrero: 'The Curia’s balance sheet, at the service of the Pope and of mission'

An interview with the Prefect of the Secretariat for the Economy presents the financial data for 2019: "The economy of the Holy See must be as transparent as a glass house, the faithful have the right to know how we use our resources".

By Andrea Tornielli

"The faithful have a right to know how we use our resources.” Father Juan Antonio Guerrero Alves, Prefect of the Secretariat for the Economy (SPE), explains in this interview with the Vatican media the state of the accounts of the Roman Curia in the 2019 budget.

Father Guerrero, you have just presented the budget of the Curia to the Council for the Economy. Many people are asking the Vatican to initiate a transparency operation, to explain the state of their accounts to the faithful, and not only to the faithful.  What can you say to those who ask to understand?

Those who ask for transparency are right. The economy of the Holy See must be a glass house. This is what the Pope asks of us. This is the commitment of the SPE and myself, and this is what I see in the other organs of the Curia. That is why a reform has been initiated. That is why some rules have been changed. That is why the Procurement Code was launched.  We are moving forward on this path. The faithful have the right to know how we use resources in the Holy See. We are not owners, we are stewards of the goods we have received. For this reason, in presenting the budget for 2019, we would like to explain to the faithful, in the most understandable way possible, what the resources of the Roman Curia are, where they come from, and how they are used.

Perhaps it is worth taking a step back. First of all, explain what we are talking about. Sometimes there is confusion between the Roman Curia and the Church. Sometimes between the Curia and the Vatican. What is the Curia?

It is true. So: first of all, what we are presenting here is not the balance sheet of the Church. There are Episcopal Conferences, dioceses, parishes, congregations and religious institutes, and an infinity of works of the Church, spread throughout the world, that do not enter into the budget of the Holy See. Nor do the accounts of the whole of the Vatican, which also includes, for example, the budget of Vatican City, that is, the Governorate; the IOR (the Vatican Bank), Peter’s Pence, as well as a good number of Foundations that collaborate with the various departments. All these institutions present their statements and report to the corresponding authorities. What we have presented to the Council for the Economy is the Balance Sheet of the Roman Curia, that is, of the Holy See in the strict sense: sixty institutions at the service of the Pope in his mission of leadership of the Church, in his service of unity in charity, that is, evangelization, communication, promotion of integral human development, education, aid to Churches in difficulty, formation of the clergy, etc..

Why do you define that of the Holy See as a "mission statement"?

Because I link money to mission. What is it for? That is why in the presentation of the budget we try to explain how the resources are used, for what purpose, for what mission. That is, we want the budget to explain how the Holy See uses its resources to fulfil its mission, its service to the mission of the Holy Father. Then there is another aspect. The Holy See does not function as a company or a state, it does not seek profits or surpluses. It is therefore normal that it is in deficit. Almost all the departments are in fact "cost centers": they perform a service that is neither sold nor sponsored. Avoiding deficit is not the objective of the Holy See. Its spirit is different.  We believe that the aim is for the costs to correspond to what is necessary for the service of the mission entrusted to us. In this sense it is desirable that we can have a great deal if that is what helps for the service that we must provide. In other words, we cannot ignore the just need for resources and the resources that are available: we must have economic prudence. But neither can we think and act on them alone, sometimes we must give more than we have in order to fulfil our mission: we must have the boldness of mission. What we must take care of is whether the deficit is sustainable or adequately financed in the long term. There are so many needs in the world. We must trust in Providence, which acts through the generosity of the faithful.

So what is the mission, in concrete terms?

The mission of the Holy See, of the Roman Curia, is not only the charity of the Pope, understood as a sort of NGO that receives donations and distributes them where they are needed. The Church does a great deal to help those in need. Most of this kind of aid is done at the local level, in parishes and dioceses. And the Curia also does a lot. The main mission of the Holy See is to help bring the message of the Gospel to the ends of the earth by communicating it, mediating in situations where it becomes unclear, assisting those in need, working for the good of humanity, supporting local Churches in need, communicating the Pope's Magisterium, seeking unity in doctrine and liturgy, judging in conflicts within the Church, encouraging reflection on certain issues, establishing a high-level dialogue, giving guidance to local Churches, etc..  The "charity of the Pope" expresses in all these ways the Pope's love for the Church and the Church for the world.

What are the data of the 2019 consolidated balance sheet?

As I have said in the past, however you look at it, the Holy See is not a large economic entity. We have had revenues of 307 million euros, we have spent 318 million euros. Our deficit is 11 million. Our net assets are worth 1,402 million euros. There are many high schools in the United States that have a higher volume than the Roman Curia indicated in this budget.

What about the budget of the entire Vatican?

As I said at the beginning, the Curia is not the whole of the Vatican. If we add the budget of the Governorate, of Peter’s Pence, of the IOR, of the Pension Fund and the Foundations that help the mission of the Holy See, we obtain a net patrimony of about 4,000 million euros. If we were to consolidate everything, there would be no deficit in 2019, nor was there in 2016, the last year in which all these accounts were consolidated. However, I do not want to say that we do not have any difficulties and that in this coronavirus crisis we will not have any bigger ones.

Back to the Curia, what are your sources of revenue?

In 2019, 54%, or 164 million euros, were generated from the same assets. Commercial activity (visits to the catacombs, which unlike museums are part of the Holy See, productions sold by the Dicastery of Communication, the Vatican Publishing House, etc.) and services (fees for some certificates, academic fees of university institutions, etc.) brought in 14%, or 44 million euros. The Vatican entities that are not consolidated in this budget (IOR, Governorate, St. Peter's Basilica) contributed 14% of revenue, 43 million. And the donations of the dioceses and the faithful amounted to 56 million euros, 18%.

Let us now come to the expenses. How much does the Curia cost, how are its costs distributed?

We could divide the costs into three blocks: what we have called asset management is 67 million euros, 21% of the costs, and includes 18 million euros in taxes and 25 million euros spent on building maintenance. We could say that these 67 million euros are how much it costs us to generate the 164 million euros of revenue that I mentioned before and that are derived from ownership. Services and administration absorb 14% of expenses. And mission expenses absorb 65% of expenses. In general, what impressed me most when I got to know the Curia better is that we do a lot with little. I looked at the budgets of various countries and regions, I found nothing comparable to maintaining 125 nunciatures and permanent missions in the world with 43 million euros, with the relevance, the capacity for mediation and the offering of the Holy See. Publishing a well-known daily newspaper, such as L'Osservatore Romano, broadcasting more than 24 hours a day in 40 languages, as Vatican Radio and Vatican Media do, generating news and explaining it as Vatican News does, spending 45 million euros: I found no comparison in the world of communication. The message of the Gospel must reach the ends of the world and, as far as possible, it is desirable that it arrives in the language of each people and in a way that can be understood in their own culture. It is also interesting to see how the Holy See's communication has been modernized in recent years, also reducing costs. Again, if we look at the Library, or the archives or Christian archaeology, which deal with a heritage not only of the Church, but of humanity, and compare it with similar institutions: we can say that they do so with dignity and, relatively speaking, with little. The same can be said of university institutions, etc. Whenever I find a term of comparison with other similar or comparable institutions, it seems to me that the Holy See does much with little, thanks to many people who work with enormous generosity. I do not want to say that we should not improve in many things. But it must also be stressed that there is much that is done well.

The 2019 deficit of 11 million is much smaller than the 2018 deficit of 75 million. It can be seen that the result has been achieved thanks to investments. Meanwhile, the operating deficit is 68 million compared to 88 million in 2018.

The finances cover, as you observe, a part of the management deficit. In addition, in the comparison, some costs and revenues that were extraordinary in 2018 or 2019 should be eliminated. Neutralizing these "one timers" would result in a deficit of €22 million in 2019 compared to €50 million in 2018. I have already said that we cannot simply consider ourselves as deficit generators. Our mission will always tend to produce deficits, it will not generate sufficient income. It is a service that we do not do for profit. We must find a way to support the mission in the long term.

What is the line on this front?

It is not enough just to have the necessary savings and spending controls to reduce the deficit. There are many agencies in the Holy See that do much with little. Savings must be accompanied by an examination of revenues, i.e., investments, securities or real estate, in order to seek their optimization. This work in collaboration is slowly coming to a conclusion. As for the discussion of revenues, we must also think about donations. The donations of the faithful to Peter’s Pence add up as well, and contribute 35% to expenses. The faithful want to contribute to the mission of the Church, but it is essential to have a policy of external transparency and communication capable of transmitting precisely how we use the money we receive and administer. This is the goal we want to achieve, this is the path on which the Holy Father has directed us. This is the line. As is well known, in recent months the Procurement Code has been approved.  The hope is that, in addition to fostering transparency, it will also make it possible, thanks to competition, to obtain savings. We need some actions in relation to what concerns work in order to have more motivated and responsible people in the tasks entrusted to them, greater mobility, as well as greater efficiency and cost reduction. We need to look for more flexible models, oriented to reward merit, commitment and professional skills.

In an interview last May with Vatican News you spoke about the project to centralize investments. How is it proceeding?

There are decisions that require time to be implemented. Progress is being made little by little. According to the Constitution Pastor Bonus (1984), the APSA is the administrator of the Apostolic See. In November 2018, the Pope asked Cardinal Marx, coordinator of the Council of Economy, to centralize investments. Little by little we are moving in this direction. This year we have had many meetings and gatherings, we have examined many possible models. I think we have made progress and have reached the decision to choose a model by learning from the good practices of others. I think it is likely that by the end of the year or the beginning of next year the final steps will be taken. Centralization will undoubtedly allow greater transparency and more precise control, as well as giving the possibility to invest in a unified way, following the social doctrine of the Church, with ethical, sustainable, good governance and professional criteria. It must be said that the majority of investments are centralized in the APSA. Many other investments made by institutions linked to the Holy See also take place through the IOR, which offers a guarantee of controls, transparency and ethical criteria. It is obvious that the IOR, which in recent years has made excellent progress, should also play an important role in the organization of the Holy See's investments. Centralization must in fact be combined with subsidiarity: not everything can be centralized if we want to be effective.

You speak of investments as if you hadn't read the newspapers of the past few weeks...

I live in the present. I read the newspapers. It is possible that, in some cases, the Holy See has been not only badly advised but also cheated. I believe that we are learning from past mistakes or imprudence. Now it is a matter of accelerating, at the decisive and insistent impulse of the Pope, the process of knowledge, internal and external transparency, control, and collaboration between the different departments. We have included in our teams professionals of the highest level. Today there is communication and collaboration between departments of economic content to address these issues. Collaboration is a great step forward. The Secretariat of State, APSA and SPE work together well. We can certainly make mistakes, we can make mistakes or be cheated, but it seems more difficult for this to happen when we cooperate and act with competence, transparency and trust between us.

What are the risks for the future?

Large states, companies and societies are in economic difficulties. Put to the test by the health and economic crisis, they take on debts that will be difficult to pay, postpone all payments to the future, and try to maintain liquidity in the face of the uncertainty that awaits. We who are small cannot but be in difficulty. We depend on returns on assets and donations, and the crisis is affecting both of these negatively. The worst thing we could do is not recognize the difficulty, or choose the "every man for himself" option. We have to walk together. We must resist. Resist together, share the sacrifices. As the Pope said, the crisis can be a special situation that improves us better. It can also be an opportunity to introduce the necessary changes that have already been seen.

What are the reasons for the request made to the departments last April to transfer their liquidity to the APSA?

APSA is the department designed to manage the resources of all departments. In April, given the uncertainty represented by the lockdown, I noted this, not knowing how long it would last, and I anticipated that it would affect revenues. We had decided not to cut donations and aid to people and Churches in need - others could be worse off than us - nor the salaries of people working for the Holy See. And for this reason donations and aid have increased. The APSA had to pay the salaries, we did not know how long the closure would last, nor if we would obtain the expected revenues. We therefore asked the departments to maintain their liquidity in APSA.

Is it true that the Secretariat of State will remain without "portfolio" and that its funds will be managed by APSA?

The Secretariat of State has been in this process for months. It is carrying out its task. It is doing a great job of ensuring clarity, transparency and order. It has brought all its funds to IOR and APSA and will participate in the process of centralization of investments, with more technical and professional management. This statement about the loss of the "portfolio", as far as I know, is not accurate. Management will be undertaken in another way, as is the case in other departments that have a portfolio. In recent months I have seen that in the Vatican, as in the rest of the Church, there is a sacred respect for the destination of funds, for the will expressed by donors. When a donation has been accepted for a specific purpose, this is respected. Many of the funds managed by the Secretariat of State have been received for a specified purpose, always naturally linked to our mission. If the funds will be managed by another entity, they must remain associated with that purpose, with the same beneficiaries.

What is the purpose of Peter’s Pence? Why are the faithful called to this collection?

The contribution of the faithful to Peter’s Pence is a concrete way of collaborating with the Holy Father's mission for the good of the whole Church. In 2019, the Peter’s Pence fund covered 32% of the expenses for the Holy See's mission. The structure and services are covered by its own funds. Peter Pence’s collection amounted to 53 million Euros, of which 10 million Euros were donated for specific purposes. In other words, the fund collaborated with the Holy Father's mission by providing 66 million euros, 23 million more than collected. This has happened in recent years. This means that it has also decapitalized. But it is always for the mission for which it is intended. Peter’s Pence must be administered with the wisdom of the honest administrator, as one invests talents, as any good family father does, in order to guarantee that the Pope fulfil his mission.

However, the news about the London investment has caused disorientation.

I understand. It is true. That is why it is important that there be clarity, that there be transparency. In the meantime, I can say one thing. As far as I know, the losses in London have not been covered by Peter’s Pence, but by other reserve funds of the Secretariat of State. And another thing I would like to say in conclusion: we must always be grateful to the Holy People of God who help the Pope's mission. Also for this we must be transparent. As Pope Francis wrote in his last message to the Pontifical Mission Societies, "the Church has always continued to go ahead also thanks to the oblation of the widow, to the contribution of all those countless people who feel healed and consoled by Jesus and who for this reason, for overflowing with gratitude, give what they have". Our duty is to manage their gift with the honesty, prudence and foresight of the good family father.

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2019 consolidated financial statement
01 October 2020, 13:00