Next pope will confront fiscal challenges, too

VATICAN CITY — The next pope will not only have to care for the souls of his 1.1 billion-member flock worldwide, but also the church’s accounts, hit by the falling dollar, sex abuse settlements and a growing diplomatic mission.

Like the chief executive of a worldwide corporation, John Paul II demanded financial accountability and promised greater transparency after years of secrecy and even scandal.

But in the last years of his papacy the Holy See was back in the red. In presenting the latest accounting, the chief of the Holy See’s economic affairs office cited Europe’s sluggish economic recovery, poor investment climate and the rising strength of the euro against the dollar.

“The dollar has really hurt them,” said the Rev. Thomas Reese, a Vatican expert. “We’re not only talking about money coming from the United States. All the rich guys in the Third World also give in dollars.”

The Vatican went through 23 money-losing years until 1993, but the situation improved dramatically after a revised code of church law made clear that dioceses around the world should assist the Vatican.

Still, its most recent financial statement, issued in July for fiscal year 2003, reported a deficit for the third consecutive year. It listed 2003 revenues at about 203.6 million euros and expenditures of 213.2 million euros for a deficit of 9.6 million euros, or $11.8 million at the exchange rate at that time.

Vatican financial experts blame heavy personnel costs — 2,674 people work in Holy See offices, more than half of them lay people. But the Vatican has also greatly expanded its diplomatic activity during John Paul’s activist papacy and the Vatican now maintains relations with 174 states around the world.

The sex abuse crisis has also taken a heavy financial toll on the Church in the United States and Ireland. The total payout to victims of clergy sex abuse in the United States has now climbed to $840 million since 1950, with three dioceses — Spokane; Portland, Ore.; and Tucson, Ariz. — seeking bankruptcy protection.

The Vatican doesn’t bail them out, but the payouts raise questions about the financial ability of dioceses to keep up their contributions.