The finance minister of Luxembourg said on Friday that Europe and the International Monetary Fund could not increase their 10 billion contribution to a bailout for Cyprus despite news that the cost to the island is going to be higher than expected.

"I believe the policy will be that the volume will remain at 10 billion," Luxembourg's Luc Frieden told German radio from Dublin, where European Union finance ministers were due to meet.

Restructuring its banks will eventually reduce the island's financing needs and other measures would help it bridge the gap, he said. Cyprus was originally meant to raise 7 billion euros but it may now have to contribute 13 billion to a total package now expected to cost 23 billion euros.

"I know that right now (financing needs) are somewhat higher for the period from 2013-2016, but we cannot do any more," Frieden said.

(Reporting by Stephen Brown)