This year's Belfast Festival at Queen's , which ends on Saturday, almost never happened. But with funding now in place and audiences turning out in large numbers, the event has reached an exciting point in its evolution, writes Jane Coyle

'BUT WHAT DOES it mean?" a child's plaintive voice was heard asking, during a particularly off-the-wall sequence in Au Cul du Loup's Scoreat Stranmillis College Theatre. The French company used a combination of song, stage effects, physical performance and a warehouse full of everyday objects to put an innovative, madcap spin on a seemingly random selection of sporting activities such as cross-country skiing, ice hockey, dressage, all-in wrestling and marathon running.

On the previous day, an audience member stormed out of Belgian theatre artist Miet Warlop's performance installation, Proposition I: Reanimation, declaring that she was clearly not intelligent enough to understand what was going on. Quietly yet purposefully, using only a pile of old clothes and some empty chairs, Warlop went about creating 40 perfectly paced minutes of imaginative storytelling, populating the space with silent characters, each burdened with his or her own unsettling personal baggage.

There have been lots of "but what does it mean?" moments at this year's Belfast Festival at Queen's, moments which questioned, puzzled, threw spanners into works and introduced customers to new, unfamiliar, never-to-be repeated experiences.

This was the festival which might never have been. Last year it was confronted with threats of funding withdrawals ­ not least from Queen's University, which has been its mainstay since the beginning. The Northern Ireland Department of Culture, Arts and Leisure (DCAL) stepped forward with a grant of £150,000 (€190,000) to keep the show on the road. Hope was fuelled that support would emerge from within the private sector and that statutory bodies such as the Arts Council of Northern Ireland, Belfast City Council and DCAL would renew and increase their financial commitment.

Up to the plate stepped Ulster Bank. Flushed with the success of its support for the Dublin Theatre Festival and the Gate Theatre's touring production of Waiting for Godot, it offered the lifeline of financial backing for the next three years.

Audiences have responded by coming out in unprecedented numbers, causing advance sell-outs and waiting lists for tickets. One of the most surprising full houses was for the never-to-be-forgotten single performance by Wayne McGregor's Random Dance Company, which fully justified the unfamiliar sight of a capacity audience for contemporary dance in Belfast.

THERE WERE, HOWEVER, many days at the start of the year when festival director Graeme Farrow wondered for how much longer he would have a job.

"There were several occasions when I didn't think I'd be putting together a programme for 2008," he admits. "But I do feel that we have now arrived at an exciting point. We're brimming with confidence, our new business plan aims to provide the best total arts experience in Ireland. You can go to festivals in Belfast every week, but our job is to put the cream on top - and that is what we're doing. The fact that we have a more secure public and private funding base will be even more evident in the programmes for 2009 and 2010."

Belfast Telegraphtheatre critic Grania McFadden has been covering the festival for many years and has observed it going through lean times. Like many pundits and paying customers, she feels positive about the content and impact of this year's event.

"Content-wise, it has been pretty good," she says. "It's been smaller and more manageable. And there have been some really thought-provoking, quirky events, like Proposition I, which was one of several great little numbers at the Old Museum Arts Centre.

"It was good to see local theatre providing the two big events on the drama programme. One of them, Owen McCafferty's new version of Antigone, was my highlight - a big, beautifully written, tender love story. But I'm sorry to say that the other - Kabosh's Carnival, by Lucy Caldwell - was my lowest moment. Very disappointing. It was great to see so many young families coming out to see a show like Score. I didn't quite get a handle on it, but it was really imaginative and different, and the kids sat as quiet as mice and seemed to love it.

"It was also fantastic that the festival brought in events like the two Morricone concerts, which people crossed continents to see. People came from Russia and Israel and Japan - to Belfast! It certainly prompts a little glimmer of civic pride."

"Morricone literally brought the world to Belfast," Farrow agrees. "Those concerts were among the most significant ever staged in Northern Ireland. Next year's opening concert may not bring in people from as far afield, but it will certainly draw many from the rest of the UK and Ireland, as will other events I'm planning."

One of the most resounding successes of the 2007 festival was Replay's spectacular production of Macbeth in Crumlin Road Prison. This year's site-specific piece takes place in a similar context but is rather more low key. Deconstructing the Maze is an exhibition of photographs by Dara McGrath in the former kitchen building of the Maze Prison. BBC Radio Ulster's Arts Extra presenter Kim Lenaghan made the seven-mile journey out of Belfast and was extremely glad to have done so.

"The Maze is still a part of our very recent past, haunted by history and carrying a very emotional subtext," she says. "The photographs capture aspects of the demolition of the building: half walls, corridors leading nowhere and locked doors. The images are projected on to large screens and their hard lines and greyness give a real sense of institutionalised lives. I was surprised at how eerie it was and how much it moved me. The whole thing was fascinating."

AS HE BEGINS to cast an eye over the figures for this year, does Farrow feel that his "small but beautiful" policy has paid off?

"Yes, our box office has exceeded £650,000 (€828,000), which represents an increase of nearly £100,000 (€127,400) on 2007," he says. "When you consider the fact that in 2005, box office was around the £300,000 (€382,245) mark, it shows you how far we've come. "

But there is a wider picture emerging a little further down the road. By 2010/11, the new Lyric Theatre and the MAC Arts Centre will be up and running, thereby creating a greatly increased number of seats to be sold and spaces to be filled. Farrow gives a thoughtful assessment of the part he believes the festival can play in building audiences for the arts in the city.

"It's a very interesting question," he says. "This year I have had only one mid-scale theatre venue to programme. In 2011, we'll have three, plus two new studio spaces. I can hardly wait to get my hands on the programme for that year! The festival will not have any problem filling those seats. The question is whether they can be filled during the rest of the year. We all need to tool up. Certainly, we have a role to play.

"This year, Prime Cut in particular was given the opportunity by the festival and the Arts Council to produce a major new play on a big scale. This isn't really possible throughout the year currently, partly because of the venue issue. But in 2011 our companies may need to produce shows that can do 3,000 seats over two- or three-week runs. We need to build capacity and a lot of attention needs to be paid to audience development.

"The festival may also need to refine its programme again, because if the standard of visiting and locally produced work rises, as it should, then we'll need to raise our own bar as a result. The response to this year's programme has been very positive, so I certainly sense that we're building trust. We need to get to a stage where the audience might not know anything about a show but knows it must be brilliant precisely because it's in the festival."