Cyprus considers rescue fund liability exclusion

Cash-strapped Cyprus, which applied for a bailout from its European partners last month, is keeping its options open on whether to seek exclusion from an obligation to contribute to rescue funds for other crisis-hit countries, its finance minister said on Thursday.

Cyprus, one of the euro zone's smallest members, applied for a bailout on June 25, badly hit by the exposure of its banking sector to debt-crippled Greece. Technocrats from the IMF and the EU will start fresh contacts with the Cypriot government from July 23 to assess its funding needs.

"We have reserved our right to withdraw (from) our obligation to offer guarantees" for part of the rescue funds, Finance Minister Vassos Shiarly said.

Cyprus had earlier asked that it be excluded from offering guarantees, but subsequently put that request on hold because it is not yet in a financial support mechanism, he told reporters. If the country receives financial support it would be excluded from having to offer such guarantees.

Members of the euro zone are obliged to commit guarantees to bailout support mechanisms for member states facing difficulties. Cyprus's total commitments to the scheme are about 1.5 billion euros.