A view shows damage at the scene after an airstrike by US warplanes against Islamic State in Sabratha, Libya on February 19, 2016 handout picture. (Reuters Photo)

CAIRO: Cash-strapped Islamic State terror group has taken to selling chickens and eggs in the streets of Libya's Sirte at a "very cheap price" in an apparent sign of its deepening financial woes, according to a media report.

"When IS took over Sirte, they seized many properties, including farms, and some of these are very large chicken farms," a former resident told Middle East Eye, an online news portal.

According to former residents from the ISIS stronghold of Sirte, militants have implemented rental and taxation systems, with a side-line in poultry.

"Relatives tell me IS people can now be seen standing in the streets in their black outfits with their faces covered, selling both the eggs and the chickens. And they are selling the chickens for a very cheap price of just one or two dinars," the source was quoted as saying.

Another indication that IS finances were stretched was a series of demands for rent, he said.

Shopkeepers were being forced to pay, despite owning their shops, as well as 10 Libyan dinars (USD7.35) per week was being charged for street cleaning and rubbish collection services.

Residents, too, have received demands for rent.

"There are some luxury beach apartments on the coast of Sirte, which used to belong to (late Libyan leader Muammar) Gaddafi, but where local people have lived since 2011, and IS visited people there and demanded rent money," he said.

ISIS is besieged by various international parties in Iraq, Syria and Libya and can only generate revenue from taxing the residents living under its control or through illicit means, such as the sale of antiquities captured in the countries it has swept across, natural resources from its captured oil fields and its sex slave trade, according to the American weekly Newsweek magazine.

Some residents travel to the nearby region of Al-Jufra to buy cigarettes for normal Libyan prices because of the extortionate rates under ISIS' backdoor market, a man claiming to be a resident of Sirte, was quoted as saying.

"(Al-Jufra) is the closest city to Sirte. It's the ordinary prices in all of the cities except Sirte," the man said.

"If they capture you with a cigarette for first time, you will be flogged, second time, flogged, third time, maybe killed," he said.

In IS-controlled Bin Jawad, 150km to the east of Sirte, militants have reinstated Gaddafi-era banknotes in a bid to shore up their finances.

"Daesh (ISIS) are forcing shopkeepers to accept the old Libyan money," another former resident said.

