Fierce pressure from home and abroad has forced President Vicente Fox's government to back pedal on its plans to sell or shut down Mexico's key film institutions.

Local legislators have agreed not to include state-backed national film institute Imcine, film school CCC and studio Churubusco in their budget cutback proposal for 2004. The proposal came as part of a $150 billion austerity package which is currently under debate in the Mexican congress.

However, the country's film industry remains in trouble. The film funds administered by Imcine, Fidecine and Foprocine, are nearly depleted and no initiative is in place to replenish them. A one peso per ticket initiative with that aim in mind remains blocked as a result of injunctions from distributors.

Victor Ugalde, who oversees the Fidecine fund, declared that these funds need at least $9m (100m pesos) each to jumpstart the Mexican film industry next year. "We could back at least 40 films with these sums," he said.

Imcine has funded more than 100 Mexican films since its inception 30 years ago. While it has backed a number of small arthouse films, it has also weighed in behind such hits as The Crime Of Father Amaro and Sex, Shame And Tears, the two biggest blockbusters in Mexican film history.

The venerable Estudios Churubusco, founded in 1944, serviced virtually all the films from Mexico's 'golden age' of cinema in the 40s and 50s. CCC has educated a number of prominent filmmakers in the country.

Although averted, the crisis has prompted industry pundits to reflect on how these institutions can remain useful and at the very least, become profitable.