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Vatican Finances Surviving World Financial Crisis

By Krzys Wasilewski  

While most countries face stagnating economies, the Vatican's finances flourish. Months before the wave of current bank bankruptcies approached Wall Street; the Holy See withdrew its assets from foreign lending institutions and invested instead in gold and land.

For a country uninterested in earthly goods, the Vatican City manages its finances surprisingly well. According to a secret report prepared by the Church economists, which was revealed in September, at the disposal of the Pope were almost $460 million in foreign currencies, $700 million in shares and over $25 million in gold reserves. Still, these figures may have changed in the last four weeks as the report did not disclose the stocks of which companies the Vatican had bought or sold.

The total amount of the Vatican's possessions exceeds $1.8 billion. It pales in comparison with almost $14 trillion that constitute the gross domestic product of the United States, but as for an institution dependent on individual donations it cannot be ignored. With the size of some 0.17 square miles and the population of 800 people, the Vatican does not produce any goods, except for stamps and museum tickets. However, it runs a bank - the Institute for Works of Religion - whose total assets oscillate between $1 billion and $10 billion.

In the past the Institute for Works of Religion was the source of many scandals. As the main share-holder of Italian Banco Ambrosiano in the 1970s, the Vatican bank bore indirect responsibility for its eventual downfall in 1982. Among many accusations brought against several Church officials were laundering drug money for the Sicilian Mafia and financing right-wing fighters in South American and elsewhere. Some journalists even suggested that the sudden death of Pope John Paul I, who died only after 33 days in office, could have been linked to the bank scandal.

The Vatican's annual budget had experienced deficits until Cardinal Joseph Ratzinger became Pope Benedict XVI in 2005. The church finances have been largely stabilized under his watch as, unlike John Paul II, the current pope prefers a more moderate pontificate with fewer international trips and diplomatic offensives. But even in this well-oiled machine something stopped working in 2007 when the Vatican ended the year with a nine-million dollar deficit.

Despite their efforts, the Church economists may not be able to keep this year's finances in check. A significant part of every annual budget is made of the so-called Peter's Pence, a percentage of the income that all Catholic churches donate to the Vatican. In 2004 it was $60 million and although this year's number is expected to be bigger, the decline of the dollar to the euro may create a significant hole in the Vatican's budget. But according to one expert, "the Holy See, despite difficulties and financial turbulences, seems to be in a good condition."

Apart from being ruled by the Pope, the Vatican is a normal independent country. It employs around 500 workers, has a government, issues its own passports, and is a member of many international organizations. These functions call for money. So does the promotion of the faith shared by over one billion people all over the world.

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