Vatican announces $13 million surplus

ROME – In its first financial statement since Pope Francis overhauled his management team, the Vatican today announced a $13 million surplus for the 2013 fiscal year, representing the difference between a $32 million deficit for the Church's central government and a $44 million surplus for the 108-acre Vatican City State.

The statement was approved by the Council for the Economy, a body established by Francis in February as part of a comprehensive financial reform.

Australian Cardinal George Pell, tapped by Francis to oversee that reform, is scheduled for a Vatican news conference tomorrow to present a series of changes in the Vatican's financial operations, including a new role and new leadership for the Vatican bank.

According to the statement released today, over $19 million of the deficit incurred by the Holy See, the technical term for the Vatican as the government of the worldwide Catholic Church, was due "to negative fluctuations deriving from the valuation of gold".

The Vatican has long converted much of its reserve assets into gold, meaning that its balance sheet every year is affected by whether the price of gold is up or down.

As in past years, the most significant expense the Holy See reported in 2013 was for personnel. Salaries and benefits for the 2,886 people who worked for the Holy See were estimated to have cost over $170 million.

In part, according to the statement, the Holy See was able to offset its deficit through a $73 million contribution from the Vatican bank, which is formally known as the "Institute for the Works of Religion." Each year the bank makes a contribution to the pope's expenses, drawing on income derived from managing roughly $8 billion in assets.

Most of those assets do not belong to the Vatican, but instead represent deposits from dioceses, religious orders and other Catholic organizations around the world. In tandem with the Vatican's overall balance sheet, the bank released its own report today stating that it had closed around 3,000 accounts in 2013 as part of a reform process, resulting in roughly $60 million in assets exiting the bank.

Most of the bank's contribution was destined for the Holy See's ordinary operating expenses, according to the statement, but almost seven percent was spent on "other works" such as the support of cloistered monasteries and a fund to support churches of the former Soviet Union.

Officials said the financial statement was prepared by an external auditor, whose identity was not disclosed.

The statement included a one-paragraph message from the Council on the Economy, which said members had approved the balance sheet for 2013 but want the new Secretariat for the Economy led by Pell to "work towards further alignment of Vatican accounting principles with international standards."

During tomorrow's news conference, Pell is scheduled to be accompanied by Maltese economist Joseph F.X. Zahra, and French businessman Jean-Baptiste de Franssu, both of whom are members of the Council for the Economy.

In recent days, Italian press reports have depicted Zahra and de Franssu as the ringleaders of a shadowy "Maltese lobby" attempting to take control of the Vatican's financial operation. In that light, including them in the news conference alongside Pell is likely to be taken as a show of support.

German businessman Ernst von Freyberg will also be on hand, in what is expected to be his swan song as president of the Vatican bank.

Pell is expected to announce major changes on the Vatican bank's board and a down-sizing of its responsibilities. Those changes will likely include transferring the bank's asset management business to another office, limiting its role to providing payment services and financial advice for religious orders, charities and Vatican employees.

French businessman Jean-Baptise de Franssu is expected to be named as von Freyberg's successor in presiding over this slimmed down Vatican bank.