Withthe buzz surrounding this year's Rome Film Festival, industry watchers have beenincreasingly scrutinising the Venice Film Festival.

Causingparticular concern is the Lido's apparent difficulty in lifting itself out of bothadministrative and financial doldrums.

Now,Venice is hitting back: Venice Biennale president Davide Croff has announced thatdespite a $3m (Euros 2.5m) cut to public funding announced last December, Venicewill have the same $12m (Euros 10m) budget as 2005 thanks to a major cash boostfrom new sponsor Fiat.

TheRome Film Festival also has a £12m (Euros 10m) budget, which comes from privatesponsors.

Croffadmitted that the Lido's public funds had dropped by over a third in the lastfour years. However, he said that a reduction in costs and a rise in privatesponsors means the next Venice Film Festival - which will take place from August30 - September 9 - will be able to tap into the same resources as last year.

Croffalso said plans to build a new Palazzo del Cinema, which have been a major boneof contention - could get underway within the next three years.

The new Palazzodel Cinema would provide much needed screens to the festival and would also beable to host a proper film market.

Still,Croff admitted that funding could still pose a threat to the Palazzo's immediateconstruction.

"Theproject is now ready, and technically it can be built within the next threeyears. But it will need money. And it will have to come from the Biennale aswell as from the local Venice government," he said.

Venice and Romehave consistently played down rivalry between the two festivals ever since Romemayor Walter Veltroni first announced plans for the capital's event.

But at the lastVenice Film Festival, Venice mayor Massimo Cacciari saidthat unless the Lido builds new infrastructure soon, it won't "be able tocompete with Rome."

Romerecently announced that it hopes to attract around 300 international industryprofessionals to the first edition of the festival, with screening rooms, and afour-day "meeting" designed to promote co-productions, new filmprojects and close deals.