Opera Ireland's recent season at the Gaiety Theatre, in Dublin, came close to disappearing. The company's level of indebtedness, which David Collopy, its general manager, acknowledges to be in excess of £400,000 - some sources place it considerably higher - is clearly not sustainable in the long term. What nearly sank the season were questions from Opera Ireland's bankers about whether it was even sustainable in the short term.

In the wake of the foot-and-mouth crisis, the economic downturn and the changed outlook after September's terrorist attacks in New York and Washington DC, it is easy to see why a bank would feel jittery about a company that trades at a loss and has an escalating debt problem.

The dilemma has characteristics common to many arts organisations. If their core activities weren't loss-making, they wouldn't need to be supported by the Arts Council. And if they have Arts Council support this year, who can guarantee that they will still have it next year?

The council's three-year funding cycle for selected clients, including Opera Ireland, clearly eases the situation in many instances. But with debt at Opera Ireland levels, a bank can reasonably examine issues that extend beyond the term of any three-year guarantee.

It took intervention from the Arts Council to secure the winter season, but sharp eyed opera-goers will have noticed that the programmes for the productions of Verdi's Don Carlo and Handel's Julius Caesar contained no advertisements for a spring season. And people who tried to book in advance - some music fans like to secure their seats very early - were spun a cock-and-bull story about conversion to the euro causing delays. The truth was that the fate of one of the 2002 operas was no longer clear.

The clouds must have temporarily appeared to lift, as printed material with later deadlines than the programmes did promise a spring season next year, pairing Bizet's Carmen with Janβcek's Jenufa.

Now, however, all has changed again. And why wouldn't it? It is hard to see a company in Opera Ireland's position engaging in the level of fund-raising needed to make a dent in its debt in the current uncertain climate. And nobody imagines that the combination of Carmen and Jenufa is going to break all tradition and turn a profit.

So the company is endeavouring to restructure its plans. Surprise, surprise, Jenufa is to go, replaced by extra performances of Carmen and, perhaps, a concert. But if this is allowed, it would be a serious contravention of Opera Ireland's three-year agreement with the Arts Council about what its output would be. It would also set an ugly precedent for a council that would have us believe it is committed to not funding deficits. A decision on the matter is expected shortly.

On the other hand, by international standards, the council's funding of opera is derisory - in spite of which, Opera Ireland has made great artistic strides in recent years. Some of the burden of debt has come about through the broadening of repertoire that the Arts Council and opera lovers surely want to support.

Opera Ireland has been rescued by the Arts Council in the past, when the company's overexpenditure breached £300,000. It's a fact not widely discussed these days that Opera Ireland's provision of opera in Ireland is but a pale shadow of what it was in its early years.

In 1961, for instance, it mounted 40 nights of opera, in 10 productions at the Gaiety Theatre - those were the years when Luciano Pavarotti, Joan Sutherland and Ebe Stignani graced the Gaiety stage. This year, there have been four productions over 18 nights.

Welsh National Opera and Scottish Opera, both founded later than Opera Ireland (which was born as the Dublin Grand Opera Society in 1941), are now fully fledged national companies. Where Wales and Scotland have experienced growth, Opera Ireland and the Arts Council have presided over a serious decline, with only a blip of improvement in the past few years.

The Arts Council, of course, must take responsibility for its consistent refusal to countenance a realistic development towards the sort of funding a national opera company would need.

But the persistent failures of Opera Ireland haven't made the prospect an attractive one. Some responsibility for the debt must lie with the company's management and the board's tolerance of its practices.

Things appear to have reached yet another unworkable impasse. Is the way forward once again to throw good money after bad? Or has the time come for a radical solution, to lead the way to providing Ireland with a national opera company and a national opera house?

I am sure the future graduates of the proposed national academy for performing arts would have a very clear answer to that.