Khalifa Haftar has funded his "eastern state" with a mix of unofficial bonds, Russia-printed cash and deposits from eastern banks, building up a debt worth around 35 billion Libyan dinars ($25.18 billion) outside the official banking system in Libya, Reuters said in a report on Thursday.

Reuters added that according to diplomats and banking sources, Haftar's sources of support could be closing, as the Tripoli-based Central Bank of Libya (CBL) has taken steps to curtail the operations of banks in the east.

The banks in eastern Libya have struggled in recent months to meet minimum deposit requirements, which could give the CBL in Tripoli the excuse to shut off access to hard currency, Reuters said, quoting diplomats.

"Haftar has built up his Libyan National Army (LNA) with the help of the United Arab Emirates (UAE) and Egypt supplying heavy gear such helicopters," Reuters added, citing UN reports.

However, it warned that Gulf countries such as the UAE have preferred not to give cash directly to Haftar, fearing it will end up being used for the wrong purposes.

Haftar has been then forced to use merchants to import vehicles and other gear, using hard currency obtained from the Tripoli-based CBL and paid out by eastern commercial banks issuing letters of credit, Reuters further explained, citing military sources.

"There is no public data on the costs of Haftar’s war, but he has sent more than 1,000 troops west plus support staff like drivers or medics. Fuel is not a problem, costing just 0.15 dinars a liter, with state oil firm serving the whole country." Military sources and residents told Reuters.

Reuters reported diplomats as saying that they do not expect Tripoli central bank governor Al-Sediq Al-Kabir to shut eastern banks completely as this would pose risks for western lenders.

"But they fear the longer the conflict lasts, the harder it will be to unify the central banks and repay debt." It added.

Reuters also says that the biggest worry among diplomats is that Haftar, who surprised world powers with his offensive, might try selling crude from oilfields and ports, bypassing NOC.

“If the offensive fails, Haftar might do this as he feels encouraged by (U.S. President Donald) Trump,” one Western diplomat told Reuters.