BUENOS AIRES — Argentina’s national film institute, Incaa, plans to convert its Espacio Incaa circuit to digital to cut costs and bolster the exhibition of homegrown films.

The National U. of Matanza, outside Buenos Aires, is developing a digital distribution system for the circuit, according to Incaa prexy Liliana Mazure.

The theaters will be connected to a central server that houses the movies and distributes them over broadband connections, affording big savings vs. sending prints around the country.

Incaa will open the network’s 23rd screen in Parana, the capital of the central province of Entre Rios, in the middle of October and expand it next year to 50, all of them digital, Mazure said. There are plans to take the count to 100 after 2009.

The circuit is a pillar in Incaa’s program for building the industry. Incaa spends about $30 million on helping finance 60-70 features a year. Yet few make a profit at home in the face of competition from Hollywood, which captures 85% of B.O.

Incaa also plans to raise the maximum amount of film subsidies by 1 million pesos ($308,000) to $1.08 million, helping producers contend with rising costs in the face of 25% annual inflation.

Average production costs have risen from $400,500 to $708,500 over the past year or so.

Argentine President Cristina Fernandez de Kirchner is poised to sign the initiative into effect, Mazure said.

“Film is now an industry in Argentina and it needs more support,” she said, adding that there are 15,000 film students in the country.

Producers have been putting projects on hold in anticipation of the higher subsidies, which are a key source of financing. They fear a slowing economy and rising inflation will cut B.O. receipts, making it harder to turn a profit.

“I keep telling producers that their projects will benefit from the higher subsidies so they should press ahead,” Mazure said.