Below we share the interview with Father Juan Antonio Guerrero Alves, prefect of the Vatican Secretariat for the Economy, in which he explains the Vatican budget for 2021 and cutting costs while maintaining the mission.
The Prefect of the Secretariat for the Economy explains the 2021 budget in an interview with Vatican Media: “Our budgeted expenses are the lowest in recent history, but we are not cutting services or restructuring staff.”
By Andrea Tornielli
“The budgeted expenses for 2021 are the lowest in the recent history of the Holy See, but the savings have been made without diminishing service to the Pope’s mission and protecting the salaries and jobs of employees. The support of the faithful is needed.”
Father Juan Antonio Guerrero Alves, Prefect of the Secretariat for the Economy, the Jesuit who received from Pope Francis the task of governing the purse strings of the Holy See in this very difficult time, does not appear discouraged.
The path of transparency is now taken and must be followed in order to account to the faithful scattered around the world how the resources donated to the service of the universal mission of the Successor of Peter are used.
Q. On 16 February, Pope Francis approved the Holy See’s 2021 budget proposed by the Secretariat for the Economy and approved by the Council for the Economy. The forecast is a deficit of almost 50 million euros, but it would have become 80 million euros if there had been no Peter’s Pence. How much and how did the crisis caused by the pandemic influence the budget?
The crisis caused by the pandemic is the cause of this restrictive budget in which projected revenues are much lower than in 2019, the last year without a pandemic. Back then, the revenue was 307 million euros and for this year we expect 30% less, 213 million. On the other hand, although budgeted expenditures are the lowest in the recent history of the Holy See – at least since the Secretariat for the Economy (SPE) has existed – it is not possible to reduce them in the same manner as revenues while keeping the mission of the Holy See intact. The total reduction in expenditures foreseen is 8%. If we exclude personnel expenses, which we have not reduced because the protection of jobs and salaries has been a priority, the reduction would be 15%.
Q. Why are the expenses of the Holy See so inflexible?
About 50% of the budget is made up of personnel expenses, an expense that is very inflexible, and which automatically increases with biennials and the cost of living index. In 2020 personnel costs increased by 2% compared to 2019. Protecting jobs and wages has been a priority for us so far. Pope Francis insists that saving money does not have to mean laying off employees; he is very sensitive to the plight of families. A time of financial challenge is not a time to give up, or to throw in the towel, it is not a time to be “pragmatic” and forget our values. This implies that, at least in the short term, 50% of the expenditure is not flexible. In addition, many dicasteries carry out their mission practically only by relying on human resources, their expenses are represented in 70 or 80% of the cost of personnel.
Q. You said, “In our case, if the donations don’t come in, we can only use the reserves.” Don’t you think there is a limit to the reduction of the Holy See’s capital?
We must not be alarmists. The reserves are there for this reason: they can and must be used in times of economic difficulty. Just think of how many countries are getting into debt because of the pandemic. The income generated by property rentals, economic activities and services will gradually recover when the economic situation is more stable, museums can open without restrictions and there will be a normal influx of tourists again. However, we need to be cautious with spending levels and it is very important that we continue to provide clear and transparent information that gives the faithful peace of mind about the use of their donations. But going directly to the question, there have been many times in its history when the Church, in various countries, has come to have almost no capital, depending on political vicissitudes. Experience shows that a Church without financial reserves would, however, continue to carry out its mission of evangelization with the creativity that the Spirit has inspired on the historical occasions when this has happened. We hope, however, that this will not happen. What we must avoid is malicious decapitalization or decapitalization due to mismanagement.
Q. The global health crisis was overshadowed and followed by a very severe, longer-lasting economic crisis and a catastrophic social crisis. In this global situation, what strategies will the Secretariat for the Economy implement?
Some activities – I have already said – have been reduced, such as congresses, journeys, meetings, some necessary work has also been postponed to a later date, but at the same time other new activities have been necessary to respond to the situation that has arisen. As a result of the situation generated by Covid-19, 5 million Euros were allocated to help through the international network of Caritas, the needs of the most disadvantaged Churches, which have become more pressing. For ordinary situations, aid has increased in some cases and decreased in others. APSA is making several efforts in these times of crisis. On the one hand, it is trying to be supportive of people and businesses that are having difficulty paying their rents. On the other, it is reorganizing itself to be more efficient in its services and to improve the returns on both real estate and mobile investments. We are also trying to streamline our internal processes to be more efficient, avoiding unnecessary bureaucracy and duplication of systems and activities, which will allow us in the medium term to do much more without the need to increase expenses.
Q. For the first time, in the communiqué of your Dicastery announcing the approval of the 2021 budget, the distribution of funds for Peter’s Pence was also published: with revenues of 47.3 million euros and disbursements of 17 million. So does this mean that 30 million will be spent to reduce the 2021 deficit?
I think it is inappropriate to say that Peter’s Pence covers the deficit of the Curia. It is not accurate. The Curia will always have a deficit. Peter’s Pence serves to cover the expenses of the Holy Father’s mission, unity in charity, which he exercises through the various dicasteries. Most of the dicasteries that exercise their mission are cost centers with no revenue. If we took away Peter’s Pence the deficit would be 47 million more. But if we took out the donation from the IOR and the Vatican City State, it would be 37 million more. If we also took away the contribution of the dioceses, it would be 23 million more, and if we still took away the revenues of APSA it would be 100 million more. So we can understand that practically all the activity and the mission of the Holy See is an expense: the nunciatures, the dicasteries, the aid to the Churches in difficulty, etc…
Q. Is the use of Peter’s Pence funds to reduce the deficit something new this year or has it already been done, and to what extent?
It is more appropriate to say that Peter’s Pence contributes to the mission of the Holy Father which, of course, has a cost. This is not new. What is new is that we have had a series of years in which the donations received – including Peter’s Pence – did not cover the costs of this mission and, as a result, the fund reserves accumulated in previous years were used up. For example, in 2019, Peter’s Pence Fund contributed 81 million to the Holy Father’s overall mission, while net revenue was 53.8 million, which means Peter’s Pence reserves decreased by 27.2 million. In 2020, because of the decrease in revenues, not just those of Peter’s Pence, we can estimate – the budget is not yet closed – a reduction in reserves of more than 40 million. We can also expect the same in 2021. This recourse to Peter’s Pence reserves in recent years means that the liquidity of the fund is being depleted and with the current crisis it is very likely that in 2022 we will have to resort to some extent to the assets of APSA. At the same time, we expect that many of the revenue streams that have declined with the pandemic will be able to resume when the overall situation improves.
Q. 47 million euros is expected to be collected for Peter’s Pence: 17 million will go into disbursements, thus into aid and charity. 30 million will be used to support the Holy See. How would you explain to a member of the faithful why it is important to continue to donate to the fund?
The 30 + 17 million euros budgeted will be used to support the mission of the Holy Father, either in the form of aid to individuals or communities, or as contributions to the dicasteries that collaborate with the Pope’s mission. The Holy See, let me insist on this, helps the mission of the Holy Father and is sustained fundamentally thanks to the contribution of the faithful. On the one hand, we cannot but be grateful for the generosity of the faithful in this very difficult year: in the midst of the difficulties of this time of pandemic, they have continued to collaborate because they believe in the mission of the Church and want to support the Holy Father. It reminds me of the Gospel story of the widow who gave a small amount…everything she had. For me, it is not just about money. On the other hand, we have to recognize that, given the pandemic situation, if this were to be very prolonged, or as some say, if it were to remain with us, the resources would not be sufficient for the economic sustainability of the Holy See in the long term. In this case, we would also have to consider reducing expenditures and decide in which activities: should we consider communicating the message of the Church and the Pope in fewer languages? Should we perhaps reduce the public presence of the Church and the Pope? Reduce the presence of the Gospel message and the Church’s ability to mediate in the international context? Less aid to Churches in need? Less care for the historical heritage received? Reducing attention to unity and communion through doctrine, liturgy, etc.? A difficult equation to solve. But I believe that in any case, we must rather do everything to optimize expenses, and count on the generosity of the holy people of God.
Q. Father Juan Antonio, the pandemic is, unfortunately, a phenomenon that still does not show signs of ending and the consequences for our lives and for the economies of our societies are expected to be felt for a long time. How does the Holy See plan to address this situation in the near future?
On the one hand, by exploring the opportunities that the new situation brings. Last year, for example, because of the many videoconference meetings, much was saved. The new situation promoted creativity and made us learn. On the other hand, progressing inefficiency, doing more with less, saving money. Improving transparency so that the faithful know what is being done with their donations. If this goes on too long we will not be able to contain the deficit except with the support of the faithful.
Q. Can you tell us what stage has been reached in the reform desired by the Pope that transfers all the funds of the Secretariat of State to the APSA in charge of managing them?
It has practically been done. Most of the funds have already been transferred. There is a small remainder that has some legal complications, but it will be transferred shortly. The Auditor-General is doing checking to certify the balances in the various accounts.
Q. In the communiqué announcing the 2021 budget approval, it stated that 68% of the resources are allocated to the apostolic mission. You have insisted a great deal on the “mission statement,” to make it clear that the activity of the Roman Curia is service to the ministry of the Successor of Peter, and several dicasteries have begun to report on how they use their resources with transparency. Do you think this attitude of greater transparency in accounting for how money is spent will be helpful?
Certainly! Transparency is useful for the internal management of resources. To reduce management costs and be able to increase mission costs. On the other hand, the faithful deserve transparency, they need to know how the Church spends what it receives. For us, it is a question of credibility. We are the first to have to demonstrate that the Church’s social morals and the moral standards we uphold work and are valid. It is often said that in managing its resources, the Church must adapt to international criteria…. We should aspire to become an international role model.