Cyprus has to sell excess gold reserves to raise around €400m to help finance its part of its bailout, an assessment of Cypriot financing needs prepared by the European Commission showed.

Cyprus has been forced to wind down one of its largest banks and impose losses on uninsured deposits in order to qualify for a €10 billion lifeline from the European Union and the IMF.

Gold prices fell around 1% on the day in the immediate reaction to the draft assessment.

They are heading towards last week's lowest level since May 2012, after the draft assessment set out plans for the sale of some 10 tonnes, the biggest euro zone bullion sale in four years.

The assessment, obtained by Reuters, also said that Cyprus would raise €10.6 billion from the winding down of Laiki Bank and the losses imposed on junior bondholders and the deposit-for-equity swap for uninsured deposits in the Bank of Cyprus.

Nicosia would get a further €600m over three years from higher corporate income taxes and a rise in the capital gains tax rate.

Of the total Cypriot financing needs of €23 billion between the second quarter of 2013 and the first quarter of 2016, the euro zone bailout fund will provide €9 billion, the International Monetary Fund €1 billion and Cyprus itself will generate €13 billion, the assessment said.

Cyprus's total bullion reserves stood at 13.9 tonnes at the end of February, according to data from the World Gold Council.

The analysis from the EU and IMF predicts the Cypriot economy will contract by 8.7% this year, following the bailout designed to put Cyprus back on a stable financial footing. It also shows that the economy will go on contracting during 2014, returning to marginal growth of 1.1% in 2015.

At the same time, debt as a proportion of gross domestic product (GDP) will peak at 126%, before falling to 104% in 2020, the debt sustainability report shows. The analysis forecasts the budget deficit to be 6% of GDP this year, 7.9% next year, 5.7% in 2015 and 2.5% in 2016.

The European Stability Mechanism (ESM), the euro zone bailout fund, also said in a proposal that the maximum average maturity of euro zone bailout loans to Cyprus will be 15 years and the longest maturity will be 20 years.

Cyprus will be charged a 10-basis-point margin above financing costs for the loans, plus a 50 basis point up-front fee for every disbursement, said the proposal, which will be discussed tomorrow by finance ministers of European Union countries at a meeting in Dublin.