The news that oil output has fallen to below one million barrels per day (bpd) shows the extent to which sit-ins, protests and strikes are starting to cut off the lifeblood of Libya's economy.

The alarming figures, issued by the National Oil Corporation (NOC), suggest that production has plunged by almost 40% from the 1.6 million bpd that were being pumped in April.

Output and exports have been disrupted by labour action at various oil fields and terminals, including the Harika and Zueitina ports in north-east Libya, as well as the Elephant oil field near Murzuq, in the south-west of the country.

Any prolonged fall in production would be disastrous for state finances, which are now even more reliant on oil revenues than they were before the 2011 revolution.

Last year, according to official figures, income from oil exports made up 95.4% of total state revenues compared to 90.6% in 2010, the final year of the Gaddafi regime. This shift is partly due to the high sales prices that Libya managed to achieve for its oil, but is also because government revenue from other sources - such as tax or customs duties - remains far below pre-2011 levels.

In parallel, government spending - particularly on salaries and subsidies - is precariously high. Last year, administrative and subsidies spending made up 90% of all state expenditure compared to 71% in 2010.

Even though just LD5.5bn ($4.4bn) went on development or capital expenditure, total state spending last year was virtually at 2010 levels.

Balancing the books this year will be hard enough without any serious shortfall in oil production, and Libya may soon find it needs money from other sources - whether from reserves, the privatisation of assets or by selling sovereign debt - if all the ambitious spending plans being discussed by the government are to be achieved.