VATICAN CITY - The Vatican reported a deficit for the third consecutive year Wednesday - about $11.8 million - but said it reduced the shortfall by nearly 30 percent from 2002 despite the costs for the Holy See's expanding diplomatic missions.

At the same time, it reported an increase in contributions to the pope, known as Peter's Pence, which it said were used for various relief efforts around the world and for the Catholic Church in the Holy Land.

The Vatican presented its annual financial report a day before a scheduled news conference to discuss the figures.

It listed 2003 revenues of about 203.6 million euros and expenditures of 213.2 million euros for a deficit of 9.6 million euros, or $11.8 million. Last year, the Vatican reported a 2002 deficit of 13.5 million euros, almost 30 percent higher than this year's figure.

The figures include the administrative headquarters of the Roman Catholic Church, its property and its diplomatic missions. Dioceses around the world are largely independent of Vatican financial control.

The Vatican went through 23 money-losing years until 1993. The situation improved dramatically after bishops around the world agreed to assist the Vatican.

Vatican financial experts often cite heavy personnel costs, noting 2,674 people work in its church offices - more than half lay people. But the Vatican has also expanded its diplomatic activity, with missions in 118 countries or agencies around the world.

The Vatican report gave no breakdown in contributions, but listing the figure in dollars said Peter's Pence took in $55.8 million last year, up 5.7 percent from 2002. Donations from the United States led the list in 2002, followed by Germany and Italy.

In a separate listing, the Vatican city-state was also in deficit, by some $10.8 million, down 45 percent from the previous year. Much went to cover the cost of running Vatican Radio, which transmits around the world.

The city-state entity runs the actual territory and is responsible for upkeep and restoration. It is a source of major revenue through the sale of stamps and coins.