The Kirk is facing a financial shortfall

The Church of Scotland must make "huge" budgetary cuts of at least �2.3m over the next five years, according to its latest finance report.

The situation is being blamed on plunging stock market values and falling membership, which has halved in the last 10 years.

The report, by the Kirk's board of finance and stewardship, said the number of ministers being recruited may have to be cut to make ends meet.

The board admitted that the news could cause controversy at the Kirk's General Assembly later this month, where its annual report will be considered.

The document gives details of the Kirk's so-called rolling budget, which says that �2.3m of cuts in the years to 2008 are vital if it is to meet its financial commitment.

To achieve �2.3m in cuts will require very painful decisions Rev Gordon Jamieson

But it admits that the board is "very doubtful" that the cuts can be met simply by cutting back on missionary work, as the rolling budget proposes.

The report states: "As costs increase, as deficits mount, as reserves dwindle, as membership falls, the need for action becomes ever more urgent."

Rev Gordon Jamieson, the Kirk's director of stewardship, said: "The Church of Scotland has been trying to do all the things that it has always done.

"We are saying now that if it's a smaller church with a smaller income, it's going to have to make some painful choices about where our priorities lie.

"To achieve �2.3m in cuts will require very painful decisions."

Falling membership

Figures show that income from congregations grew by just 0.8% in 2002, a statistic which is linked to falling church membership.

The report also admits that cuts even greater than �2.3m could be necessary in the next few years if further stock market falls force the Kirk to top up its contributions to pensions schemes.

The board said that its pensions schemes were currently running a "very large" deficit because of the downturn in the global economy.

The cost of schemes like the Tiberias project, a �13m hostel development on the shores of Lake Galilee, could also require further investment.

Delegates at the General Assembly will be asked to vote on the financial budget for 2004.

The controversial cuts proposed in the rolling budget will be outlined to attendees, but they will not be asked to vote on them.