The fledgling government of Brazil's President Luis Inacio'Lula' da Silva is poised to announce a new subsidy grant of $9.2m (Reals 25m)towards film production.

This is welcome news for a film community that has suffered fromrecent cutbacks in film investment from the public sector.

State-owned companies such as BR, BNDES and Electrobras began tocurtail their investments in film after the election of left-wing presidentLula last year in anticipation of changes in the government's film policy.

Even the Rio International Film Festival (running from Sept 25 toOct 9) was affected by the investment slowdown when state-backed petroleumdistribution company BR trimmed its $2m annual sponsorship to $700,000 thisyear.

Luckily, the city of Rio stepped in with $1m less than two monthsbefore the festival's start date. "I hope I never go through that kind ofstress again," said Rio's festival co-director Ilda Santiago.

Meanwhile, state-backed film council Ancine has launched thecreation of a film investors body Funcines that will be administered byBrazilian stocks commission, CVM.

In exchange for tax rebates, member investors will be encouragedto commit financing not only to film production but also to the exhibition anddistribution of Brazilian films.

"A lot has been done to foster film production but not theirdistribution and exhibition," said Ancine director Gustavo Dahl. "Out of 100films being made, roughly 30 get distribution," he added.

Brazil has some 1,700 screens serving a population of 170 million- of which 10 million are regular moviegoers. As in the rest of the world,Brazilian films struggle against US fare for screen time.

Dahl points out that the majors have been distributing Brazilianfilms of late. "Without them, most of these films will not be released," hesaid.

Aside from Ancine's efforts to support exhibition,a privateinitiative is currently underway to convert some 100 independent screens to thedigital format.