The organiser of WOMAD New Zealand says it had little choice but to pull out of the 2021 event.
The Taranaki Arts Festival Trust said it risked losing millions of dollars and being declared bankrupt if Covid-19 disrupted the festival.
WOMAD UK, which oversees the event internationally, however said it was pushing on with plans for a New Zealand festival in March, drawing on Kiwi talent.
For two decades sounds from around the world have rung around the Bowl of Brooklands in New Plymouth, attracting tens of thousands of people from around the country to the three-day WOMAD festival.
The Taranaki Arts Festival Trust (TAFT) has until now held the contract to put on the event, but it won't next year.
Chief executive Suzanne Porter said there had been a difference of opinion between TAFT and WOMAD UK about the risk Covid-19 posed to events in New Zealand.
"Our government will close things down as we've just seen recently in Auckland with just two days' notice.
"We analysed what that financial risk was, modelled it right through.
"We could carry that risk through until about February and in February we start going over the $2 million mark and I need to be very clear here - TAFT carries the loss, so we couldn't take that risk."
Porter said it would only take Auckland going into lockdown for WOMAD to fall over completely.
If that occurred in the final week leading into the festival the charitable trust's exposure would have been closer to $3.5 million.
"We would be committed to paying the artists. They'd be in town. We'd be committed to paying for the hotel rooms because they'd be in the hotel rooms. Our site would be set up.
"So we wouldn't be able to honour our debts which is not the way TAFT works. We are not people who would simply not pay our debts and close up shop, it's just not kaupapa."
Porter said the trust had looked at every avenue and even made a plea to the government for it to underwrite the event, but it fell on deaf ears.
"That really is the essence of the decision. It has been gut-wrenching. TAFT has been here since the beginning, it took risks, it took losses for a number of years.
"We were happy to take a rest year in 2021 and come back in 2022 when hopefully our borders were open at least to some countries and promote the full WOMAD experience again."
WOMAD UK director Chris Smith however reckoned the Covid picture in New Zealand was much rosier.
"We have looked at what is happening in New Zealand and certainly we can see there are a lot of events that are still happening and selling very well and there's clearly a demand.
"The situation in New Zealand is very positive regarding the pandemic and the advice we received was that there was good reason to carry on."
It was believed WOMAD UK was now working with multinational concert producer Live Nation on the New Zealand event.
Porter said she believed that TAFT had lost its hosting rights indefinitely and that Live Nation would want a multi-year deal for stepping in.
Smith, however, said WOMAD UK was open to working with the trust again.
He said WOMAD New Zealand 2021 would be different and feature an almost exclusively Kiwi line-up.
"There's a very rich range of artists from different cultures resident in New Zealand playing creatively and to a high standard and that's the model we've developed in Australia and we are looking to use in Spain and the UK.
"So we're very much moving during this difficult period to actually trying to keep the spirit of the event alive and to keep the spirit of cultural exchange alive, but mining the resources that are within the countries we are working in."
That did not wash with Graham Donlon, host of Most FM's Music Without Frontiers radio show in New Plymouth.
"WOMAD is an international experience and its own name World of Music Art and Dance. The emphasis being for me on the world and I believe that having a New Zealand or Aotearoa focus would damage the WOMAD brand."
Donlon said an Aotearoa music festival was fine, but the WOMAD branding should go.
RNZ's own world music aficionado Trevor Reekie was simply overjoyed the event was going ahead at all.
He reckoned New Zealand had the talent pool to pull it off.
"There are people around who could book such a festival and there are a lot of bands that are obviously domiciled in New Zealand, but a lot of them have attended overseas festivals and are very familiar with the WOMAD format.
"All you can really do is just have faith in the people who are organising the festival and hopefully it will turn out to be all right for the public."
WOMAD UK's Chris Smith said if everything went to plan the Bowl of Brooklands would once again be the centre of attention over three days in March.
Suzanne Porter meanwhile said TAFT, which had shed two full-time equivalent staff and reduced contractors' hours - was not sitting on its hands and was already planning a new international event for 2022.