In a further sign of thecrisis that has gripped the Italian film industry, new figures released bynational film body Anica show that Italian investment in local productiondropped 5.7% in 2004 while average budgets slumped 17.7%.

On the upside, the data alsoshowed that while battling an economic crisis at home, Italians have beenlooking for opportunities overseas and are getting increasingly involved ininternational co-productions.

Italians invested Euros284.4m last year on local production compared to 301.7m in 2003, Anica said.Overall, private investment amounted to Euros 189.5m in 2004, marking a 1.9%drop on the previous year.

The largest drop was instate funding, which slumped to Euros 94.9m from 108.4m in 2003 with only 46films receiving government funds compared to 57 the previous year. Anicapointed out that only 3 films were actually awarded funds during 2004.

Film budgets also plummeted,with average investments down from Euros 2.5m in 2003 to Euros 2.1m in 2004.

Meanwhile, the number ofItalian films produced remained virtually unchanged, down from 98 in 2003 to 96in 2004.

Significantly, producers whowere unable to fund pictures at home turned to other territories. As a result,co-productions rose from 19 in 2003 to 38 in 2004.

Of these, 15 projects sawItaly as the majority co-producer, compared to 12 the previous year. But thebiggest rise was in the number of minority co-productions: Italy boarded 23international projects last year, a 16% rise on 2003.

The Italianfilm sector has been up in arms about what it perceives as the failure ofSilvio Berlusconi's government to sustain the local industry. In particular,the industry deplores the fact that Italy still does not have a tax shelter,despite a succession of governments promising its imminent introduction.

"Howlong will we be able to hold out before the market share of Italian filmscollapses to a 7 or 8%'" said Felice Laudadio, the former Venice FilmFestival director who currently heads the Taormina and EuropeaCinema film festivalsas well as Rome's Casa del Cinema.

"Werisk the same thing in Italy that happened in Germany, where the national filmindustry suffered irreparable damage when local films tumbled to a 5% marketshare," he warned. "An industry can't live on waiting for a dozenfilms such as [Roberto] Benigni, Aldo, Giovanni and Giacomo and [Leonardo]Pieraccioni," Laudadio said, referring to Italy's top-drawing comics.

Local filmsproduced last year also included Ferzan Ozpetek's Cuore Sacro which iscurrently on release through Medusa, Saverio Costanzo's critical hit Privateand Paolo Sorrentino's Consequences of Love. Internationalco-productions included Tickets, co-directed by Ken Loach, Ermanno Olmiand Abbas Kiarostami, The Merchant Of Venice and Hotel Rwanda.

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