Fr Guerrero: We have reduced costs and will show our accounts to Bishops’ Conferences
By Andrea Tornielli
"To help the economy of the Holy See to meet its needs, taking care that economic activity does not distract or detract from the credibility of the Holy See's mission of fostering unity in charity and the evangelising mission of the Church, which is what matters.” This is how the Prefect of the Secretariat for the Economy, Father Juan Antonio Guerrero Alves, describes the task of the Dicastery he has led for two years now.
In this interview with Vatican Media, Guerrero offers some data on the new budget of the Holy See, which has increased significantly this year due to the inclusion of new entities. Cost containment continues (further reduced by €4 million). The budgeted deficit is lower than that of last year, and the Prefect hopes to soon be able to provide data on the income and expenditure of Peter’s Pence as well, anticipating that this year too contribution of the faithful has decreased.
Interview with Father Juan Antonio Guerrero
Prefect of the Secretariat for the Economy
1. The Holy See's budget this year has increased from 300 to 800 million euros. Can you explain in detail the reason for this increase?
What is new this year is that the number of entities included in the budget of the Holy See has increased. In July, the Council for the Economy (Consiglio per L’Economia, CpE) approved new parameters for the Holy See's balance sheet. Last year there were 60 entities and this year there are 90. The reason why the CpE took this decision is because these new parameters allow for a more complete view of the economic situation of the Holy See. More visibility, more transparency, and more control. The Secretariat for the Economy (Segreteria per l’Economia, SpE) has worked to make this possible, because we are concerned about not having a vision of the risks outside the budget, which fall on the Curia when there are problems.
2. Can you clarify the new scope of the budget? And what can you say about the inclusion of the Casa Sollievo della Sofferenza (“Home for Relief of Suffering”), the large hospital in San Giovanni Rotondo founded by Saint Pio of Pietrelcina (Padre Pio)?
Entities have been included which, although they are not properly speaking dicasteries or parts of the Roman Curia, are either the property of the Holy See or depend on and are under the financial responsibility of the Holy See; for example, the Bambino Gesù Paediatric Hospital or the Casa Sollievo della Sofferenza, some foundations instrumental to the dicasteries or the pension fund, the health care fund, the four major Roman basilicas and the shrines of Loreto, Pompei, and Padua. This means that we have gone from considering a budget of around €300 million to one that will exceed one billion euros. The hospital you mention in your question and some other entities are not yet included in this budget that we are presenting; they will be included in next year's budget.
The approval of the incorporation of new entities to the balance sheet dates from July 2021. The new entities have made an effort to adapt in such a short time to the timetable proposed by the SPE; this integration is a process that is almost complete, with only three entities missing. That is why this year's budget remains at around €800 million. Also, if you remember, last year the budget was approved in February, while this year the CpE approved it in December. We are also making progress on these small things.
3. Can you briefly describe the key figures at the close of the accounts last December?
We are talking more about the budget than the year-end balance sheet, which we will present in the middle of the year. Within the new parameters, revenue is €770 million with expenditures at €803 million, that is, a total deficit of €33 million compared with the €42 million budgeted last year. If we consider the budget of the 60 entities, as last year, the deficit would be €45.8 million. Last year we budgeted for a €49.7 million deficit for 2021.
It is understandable that the CpE has had difficulty in approving a budget with such a deficit for another year and has asked us to make plans to further reduce expenditures and increase revenues. According to our forecasts, we expect a somewhat lower deficit than budgeted in 2021. I do not dare give figures for the 2021 closure, as you ask me to do, because we have not yet closed the year, and although this year we have introduced the quarterly closure of the accounts, the forecasts can still be improved. We do not have the data for the last quarter and we are testing a new estimation system, and we do not yet know how reliable it is until we have tested it for more than one year.
4. What are the most important results that have been achieved in the last twelve months?
The same as in the new budget: containment of expenditures, without reducing the Pope's charitable work, but rather increasing it, with vaccinations for the homeless, increased aid to the Churches in need, etc.; and at the same time a further decrease in income. I believe that the dicasteries are aware of the economic situation and are reducing their expenses as much as they can. Sometimes we ask them to reduce even more. Obviously, there is a limit to the reduction — the mission has to be accomplished. In general, it is done with quite a few personal sacrifices from many people.
5. You emphasise the fundamental aspect of monitoring as the main positive factor: how can this be combined with the need to streamline bureaucratic procedures to make the system more efficient?
We must not confuse bureaucracy [in a negative sense] with procedure and discipline. New procedures and greater discipline in processes have been introduced, and it takes time to adjust, it will take time to get used to, because it is a cultural change. The mere fact that economic operations are seen and examined by another body, or that in the same dicastery there is a segregation of functions, introduces a further step.
As far as bureaucratisation is concerned, we each have to recognise the part of the task that remains to us. Let us take as an example the case of procurements, where we have had a new law for more than a year. We must humbly recognise that there is some truth in this and that we have produced an excess of unnecessary bureaucracy. As a control body we find ourselves with a new law to apply, in addition to our inexperience in application; and we want to do a good job and apply it well. We are probably weighed down too much by a few mistakes of the past that have detracted from our credibility as a Church and we may be overly thorough for fear of falling into the arbitrariness that led to those mistakes. We are trying to simplify processes and standardise them to facilitate the applicability of the law. The other side, the contracting entities and dicasteries, also have to recognise that they have to take steps and change many long-established practices. The difficulties and complexities of the new process to which we are not yet accustomed are often over-emphasised, perhaps in order to continue doing things as usual, avoiding the new procedures.
6. Can you give an example?
Let us suppose that an institution or a Dicastery has to face a major expense (a complex process is done for large sums) for a purchase or a contract. The first thing it has to do is to ask for authorisation. But once you have obtained it, you cannot go to, say, a friend and give him the order or buy from him. Of course, that would be the most immediate and unbureaucratic method. I can do it at home and with my own money, but not in the Vatican and with money of which I am not the owner but the custodian.
In the process designed by the new law, you have to define what the need is, open a public tender to the various bidders (where even a friend can participate by making a bid, but there are also other distributors and brands). Once all the bids have been received, they are evaluated technically and economically by an independent commission and the best bid is chosen. All this must be recorded in writing or in computer format. More formalities have been introduced, which are necessary to avoid clientelism, extra commissions, etc. This has led to more bureaucracy (or rather, procedures and discipline), but also to more transparency and savings.
The time of making economic operations arbitrarily and without giving an account is over. Today, above a certain amount, a detailed explanation of the operation must be given in order to obtain authorisation, the procedures stipulated for contracts must be followed, which must provide a record of the actions carried out and their justification.
7. How much has the pandemic affected and how much is it continuing to affect the Holy See's accounts?
This year we are presenting the Budget for the third year of the pandemic, which remains restrictive. The most notable feature, given that revenues are still lower than in the pre-pandemic period, is cost containment. Compared to last year's budget for the same 60 entities — which we can say constitute the Curia — this year the Curia’s expenditures reached a new all-time low by budgeting €289 million compared to last year's €293 million: a reduction of €4 million. The budget for the new parameters increases by €10 million, €9.5 million of which is an increase in staff costs as a result of an extraordinary adjustment in a hospital. This year, trying to be optimistic, we have budgeted €13 million more ordinary income than last year, [but] we will see how the pandemic behaves.
8. In the year just ended, to what extent have the faithful around the world helped the Holy See?
We are very dependent on uncertain income, which we see decreasing every year in this time of pandemic. It has to be this way, since the way we receive most of the donations from the faithful is through the collection of the Peter’s Pence in the churches, and the attendance in times of COVID has been reduced. This should make us think about other methods of soliciting the help of the faithful and receiving donations.
But to answer your question more precisely, we have to wait until I present the accounts of the Peter’s Pence collection, which are not yet closed, which we will close at the end of February as donations from the 2021 collection are still arriving from some countries through the nunciatures.
Roughly speaking, I can say that in 2021 there has again been a decrease compared to the previous year, which I would venture to quantify at no less than 15%. If in 2020 the total collection of the Peter’s Pence was €44 million, in 2021 I do not think it will amount to more than €37 million. The decrease in 2021 is in addition to the 23% decrease between 2015 and 2019 and the 18% decrease in 2020, the first year of the pandemic.
9. How do you plan to address the lack of resources in the short- and medium-term?
We certainly need a plan to improve revenues. There is a limit to the reduction of expenses. In the short term, we are reducing assets. In the medium term, first of all, we have plans to improve internal efficiency, optimising the return on assets. On the real estate side — we always speak of the great patrimony of the Holy See — there are many buildings given for the service of the mission of the Church, about 60 churches in Rome, and not a few buildings given to university institutions, hospitals, and other institutions at the service of the mission of the Church. This large portion of the real estate holdings has no economic benefit but only social benefit, and sometimes has economic costs.
Another portion is set aside for institutional use: the Vatican offices and the facilities of the dicasteries [for instance] only have costs. Only 20% of the real estate is left for economic return. A plan on the table at APSA is to increase this area through a reduction of the area for institutional use. Another aspect is the centralisation of financial investments, which we hope will finally be completed this year.
10. What are your projections?
According to our projections, we are not sustainable with more internal efficiency alone. We also need to look for ways to attract more donations.
The first requirement is transparency and clear accountability, and I think we have taken many steps in this direction. Apart from giving an annual account of the budget and the balance sheet, this year we hope to give an account of the inflow and outflow of the Peter’s Pence collection and to send the accounts of the Holy See to the Bishops' Conferences for their information. We have to make the local churches more aware of the needs of the Holy See; the Curia is at their service and must be largely maintained by them. There is a great difference in the commitment of the various Churches to the support of the Roman Curia. And [we also need] to enlist the help of the faithful, who want to support the Pope in his mission of unity in charity, which is after all what the Roman Curia does.
11. Can you say something about how the working group on economic resources – which involves the SPE, APSA, and the Secretariat of State — has worked and is working?
The working group worked very well up to May-June 2021 when its work ceased. The assets were handed over to APSA immediately, but then there were still a few details, some powers of attorney to sign, relationships and roles to define, information to share, and the legal steps to make it all effective; that was the work of that group. We then continued to work on updating and standardising accounting and administrative procedures in the departments of the Secretariat of State, including the nunciatures, but already in the usual communication and collaboration between the three dicasteries. The management of assets was transferred to the APSA, with the oversight of the SpE, and in this way we have continued to work closely with the two dicasteries.
12) How was the issue/question/matter of the Sloane Avenue building in London resolved?
It was an operation carried out in full transparency and according to the new rules for Vatican contracts. A broker in London and a law firm were hired, both in a restricted tender, as well as a trusted person in London to oversee the process and represent our interests, and the process has been monitored by a team from the Holy See with some external professional help from Rome. Sixteen bids were received, four were selected; after a second round of bids the best one was selected. The contract of sale has been signed, we have received 10% of the deposit and it will be concluded in June 2022. The loss from the alleged swindle, which has been much talked about and is now being judged by the Vatican courts, was already taken into account in the balance sheet. The building has been sold above the valuation we had in the balance sheet and the appraisal made by the specialised institutions. Both the transfer of the assets of the Secretariat of State to APSA and the sale of 60 Sloane Avenue, as well as other special economic operations of the Holy See, have been and continue to be an internal team effort with the external professional help we have needed. We have learned a lot from each other and we have found a method of teamwork that was not widely practised in the Holy See, and that helps.
13. After two years as Prefect of the SPE, how do you see the Holy See's economy today?
The Roman Curia is made up of centres that have expenses, but little income in return for the service they provide. The income from the patrimony helps, but as we have said, it is insufficient to make the Curia sustainable. If we live on donations, it is not in order to have a surplus, but to use them for the purposes for which they were given. Our aim is to be sustainable, not to have a surplus.
We are well aware that we have made major mistakes in financial management, which have undermined the credibility of the Holy See. We seek to learn from them and we believe we have remedied them so that they do not happen again. In recent years, encouraged by the Holy Father, we have taken important steps in the right direction in economic management: greater professionalisation, more teamwork, more transparency and less secrecy, establishment of oversight procedures, greater recognition of our weaknesses and attempting to remedy them... Important changes have been made with the publication of certain laws. But slowly, the culture is changing. We are working in the right direction.
The economy of the Holy See has been accorded too much significance. It is not of great dimensions, nor is it a particularly important activity among those carried out here. It seems to me that, if we do things well, it does not have much objective interest for the general public. As a journalist said to me after presenting the last balance sheet: "There’s no news here." And that is true, because there is only news when there are mistakes, fraud, or corruption. Our duty is to report transparently. Perhaps the accounts of the Holy See are of interest to those who contribute, who are then able to see how the money with which they help is spent.
14. And how do you see your Dicastery?
If I were to summarise what, for me, is the most important purpose of a dicastery dedicated to the economy, such as the SpE, I would say: to help the economy of the Holy See to meet its needs, taking care that economic activity does not distract or detract from the credibility of the Holy See's mission of fostering unity in charity and the evangelising mission of the Church, which is what matters.