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The Frank O'Connor International Short Story Prize, worth €25,000, is under threat with "no guarantees that it will survive beyond this year", according to reports.
Formed in 2005, the prize for short story collections had its prize money reduced from an initial award of €50,000. The award is funded by Cork City Council and in the gift of the Munster Literature Centre.
Pat Cotter, director of the Munster Literature Centre and administrator of the award, told the Irish Times: "In the current economic climate, harsh decisions are constantly being made.
"Cork City Council can give no guarantees that the award will survive [beyond this year]. We are all living in a time of uncertainty about everything. It’s not that the council is threatening to withdraw funding, it is just that it is as uncertain as we are. The prize has certainly justified itself,” he said.
Cotter said: "We had our biggest entry this year, with international publishers submitting 78 collections from all over the world, including five in translation, one of which has made the shortlist. I know this is a prize to win."
Cotter said the council could not confirm to him whether funding would be continued and that a decision had yet to be made.
This year's winner will be announced on 5th July.