German Chancellor Gerhard Schroeder has greenlit a $110m(Euros 90m) venture capital fund for the German film industry and will reservethe necessary financing in his planned national budget for 2006.

According to guidelines which have just been made public,the fund would be able to grant conditionally-repayable loans of up to 20% ofthe budget for a German film or German co-production so long as certainprerequisites are fulfilled.

These include a "German spend" element,requiring that five times the amount of the loan must be spent in Germany.Producers will also have to furnish a legally binding distribution contractwith a commitment to distribute the picture on at least 30 prints (seven printsfor documentaries).

Individual loans will not exceed $1.8m and internationalco-productions should not be more than 50% of the German co-producer'sfinancing share. The minimum amount paid out to feature films will be $120,000($37,000 for documentaries).

It is also aimed to create a revolving fund to supplement theinitial $110m round of financing which is limited to the next three years.

According to State Minister for Culture Christina Weiss, aworking party of representatives from the film industry and the Schroederadministration have developed "a sustainable instrument which will bothstrengthen the competitiveness of the film producers and also ensure for morebusiness in the German studios."

Weiss said she was convinced that, "in the light ofthe large degree of agreement between the governing coalition and the[opposition parties] CDU/CSU on the central issues of film policy", thefund's concept would be able to rely on a "broad majority" inparliament.

In addition, Weiss is also looking at working with thefilm industry on to examine financing models "with more extensive participationof private venture capital" and to have the Federal Finace Ministryundertake a review of the Media Decree's "permanent establishment"ruling, a thorn in the side of international co-productions "by the end ofthe summer recess, possibly even earlier."