The 2014 budget is the first since major reforms of the Holy See's scandal-ridden finances were introduced by Pope Francis, which came into effect in March, under the new Secretariat for the Economy, Australian Cardinal George Pell.
The Vatican deficit fell from €37.2 million ($54.7m) in 2013 to €25.6m last year. The 30 per cent improvement was mainly due to currency fluctuations that boosted returns on investments.
"But we can't continue like this for too much longer,'' Cardinal Pell said in Rome On Thursday.
In an article for the Catholic Herald in December, Cardinal Pell said the new budgeting and reporting procedures had meant the secretariat discovered "some hundreds of millions of euros were tucked away in particular sectional accounts and did not appear on the balance sheet".
The Vatican's final figures for 2014 also showed a continued budget deficit on the part of the Roman Curia, but this was offset by profits coming from the Vatican Museums' "cultural activities," which include the Sistine Chapel.
The Director of the Office of the Prefect of the Economy, Danny Casey, the former financial guru for the archdiocese of Sydney, said the Vatican which totalled €1.1 billion, and liabilities, which totalled €222 million.
The most significant expense for the Holy See was the cost of its 2,880 staff, which totalled €126m.
Asked if it took blood, sweat and tears to get the Vatican accounts to this point Mr Casey said "just a bit". But, he said: "We've got our arms around it now and we know where to start."
The Vatican's offshore status has fuelled rumours of unethical financial practices for decades, particularity since Roberto Calvi, dubbed "God's Banker," was found hanging under Blackfriar's Bridge in London in 1982, amid claims he was involved in mafia money-laundering.
