The festival is staged by Queen's University
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The annual Belfast Festival at Queen's is to get £300,000 over the next three years from the government.
Arts Minister Edwin Poots said it meant the festival could develop "a more sustainable model based on box office receipts and commercial sponsorship".
He said £125,000 would be allocated to the 2008 festival, with £100,000 in 2009 and £75,000 in 2010.
The university said the funding was a recognition of "the festival's enormous contribution to the economy".
The festival organisers have been battling in recent years to secure its long-term future.
Lifeline
The university had threatened to cancel the event, but a £150,000 one-off grant from the Department of Culture gave it a lifeline for 2007.
In a statement, Queen's said the festival "puts more than £6.5m a year into Northern Ireland businesses, benefiting a number of sectors including tourism and hospitality".
"The university hopes now that other funding partners who benefit directly from the festival will recognise the substantial opportunities provided by a properly-funded international festival and respond accordingly," it added.
Mr Poots said he had "every hope that the corporate sector will play an increasing role".
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