Maureen Kennelly plunges into the controversy: "Kilkenny is a small town." Again, more firmly, "a town". Reckless words from the Kerry-born Festival Manager, but she assures me she means it in the best sense. "It's a community." The "intimate" scale of Kilkenny means that everyone gets involved in the festival. She has close contact throughout the year with the local media, local authorities and sponsors. "There's a strong sense of ownership of the festival."

This is Kennelly's second year as Festival Manager, having joined the festival team as a publicist in 1997. From a specialist festival concentrating on classical performances from artists of the first rank, to a general multi-disciplinary event, the festival has exploded in the past few years, and now has a budget of £400,000. The Arts Council recognised its development this year by increasing its grant by 77 per cent, to £124,000, and the Millennium Festivals committee has supported the outdoor events for the second year running.

Is there a limit to the march of its progress? "The only limits are those of our imagination," Kennelly says. "This is our biggest festival ever, but we think we can sustain it in terms of audiences. Already, bookings are up on last year, which shows that there is a demand. We have broadened out to include all art forms, but the emphasis is always on quality."

She hopes that the festival will continue to commission and co-produce work in the future, rather than simply taking shows that are touring on the festival circuit. This year's co-production, with Theatre Unlimited, is the premiere of Brendan Kennelly's Judas, and the David Mach sculpture show is also a specially curated, site-specific event. If the festival were to gain a fulltime Artistic Director, which it's currently aiming towards, the possibilities for co-producing would be increased. "I'm not an artistic director," Kennelly insists. "The programming this year is an ensemble effort. We believe in team work."

Paul Fahy - in addition to his role as press officer at the Galway Arts Festival - is a programme consultant, and, since Kennelly herself trained in arts administration in Galway and worked for the Druid Theatre Company there, the links between the two festivals are strong. "But we're not trying to become another Galway," Kennelly says. Despite the now ubiquitous parade? "Our parade is different - it's more of a carnival."

Is there a danger that expansion might dilute the festival's identity, that the attempt to be all things to all people might diminish its existing strengths? "We will always have our own particular personality," Kennelly says. "That comes from the compact setting, the very special atmosphere and environment of a medieval city, with its unique streets and venues and its accessibility."

Tourists are charmed by it, of course, and the festival, which attracted 60,000 visitors last year, won a Chamber of Commerce tourism award. Nevertheless, Kennelly is conscious that the interests of the tourist industry and those of the arts world won't always coincide. "Tourist satisfaction ratings are high," she says, "but if we really wanted to boost visitor numbers to the city, we'd move the festival to November. But we want to continue to present all the open-air performances like the openair Shakespeare in the Castle grounds that we've co-produced with Bickerstaffe, for example. These have created a brilliant atmosphere here over the past few years."

The numbers from abroad increased dramatically last year, due in part to the Millennium Festivals' help with overseas marketing. Local audience attendance is strong too, from Kilkenny city and county, closely followed by Waterford, Carlow, Laois and Dublin.

A new venue this year is the restored Parade Tower in the west wing of Kilkenny Castle, with a raised balcony area and a pine ceiling. Donal O'Kelly and Brouhaha from the UK will perform in this space, which functions as a conference centre for the rest of the year. New hotels have expanded the options for readings and performances and as usual, there will be openair performances, from the Polish Teatr Osmego Dnio who will perform their word-less show, The Summit, in Market Yard; from Barnstorm and Les Oiseaux de Lux. The festival parade will wrap it all up, accompanied by the Ebony Steel Band, of London's Notting Hill fame - from the Carnival, that is.