The influence of the "Islamic State of Iraq and the Levant" (ISIL) is in steep decline as Iraqi forces backed by the coalition continue to deliver blows to the group's dwindling resources, Iraqi officials and observers say.

"Army forces, with support from the international coalition, this year have managed to retake major cities in Anbar such as Ramadi, Heet, al-Rutba and the city of Fallujah, which the terrorists have described as their impregnable fortress," said Ministry of Defence spokesman Brig. Gen. Yahya Rasul.

Iraqi forces also have scored a series of successes in the run up to the liberation of Mosul, he said, in particular retaking al-Qayyara military base, and more recently liberating al-Hajj Ali and its neighbouring villages in southern Mosul.

"The heroes of the military engineering also have built a 250-metre long iron bridge on the Tigris River connecting Makhmour and al-Qayyara to allow military vehicles, armoured vehicles and tanks to cross and head for Mosul," he said.

ISIL, which at one point in 2014 held nearly 40% of Iraq's territory, now is holed up in Mosul and a few small areas.

"The current year will be the year of final victory over terrorism," Rasul said.

"We have eliminated their oil smuggling and hit many bases in which they gather taxes and protection money, known as al-hesba centres, in addition to cutting off their transportation routes and supply lines," he said.

"Today all army, police and tribal forces are standing as one against terrorism and the end of ISIL is already approaching on the horizon," he said.

ISIL's 'crushing' financial crisis

ISIL is suffering from a crushing financial crisis as result of its defeats and the targeting of its resources, said Ninawa-based journalist Mohammed Tariq al-Bayati, who works for al-Ghad Radio.

"ISIL now has been degraded to looting government buildings, pulling out doors, windows, dropped ceilings and ceramics from government institutions and selling them at local markets in Mosul," he told Diyaruna.

ISIL elements also have been blowing up some buildings and extracting iron castings from the concrete to sell as scrap, he added.

Muzhir Mohammed Saleh, an economic adviser to the prime minister, said ISIL has lost nearly all of the income it had two years ago.

ISIL in Iraq is currently a "bankrupt terrorist entity" as ongoing military operations continue to deprive the group of the financial resources in the cities and land formerly under its control, he told Diyaruna.

"The terrorists used to fund themselves by stealing and smuggling crude oil from old wells and looting livestock and all public and private property," he said, "but these sources are no longer available now that our forces have retaken many occupied cities".

Decline in funding and fighters

"The international coalition has played a key role in degrading ISIL's capabilities by directing airstrikes at its money caches and smuggling activities, and the world is now more united against terrorism," Saleh said.

ISIL's losses are crippling, according to Hashem al-Hashemi, an expert on extremist groups.

"In addition to losing cities and sources of funding, there is a sharp decline in its number of foreign fighters sneaking into the country, as well as local volunteers in its ranks," he told Diyaruna.

"ISIL has lost, in fighting and coalition aerial bombardments, its best leaders and fighters," he said. "According to the information we have, 40 out of 47 senior leaders in the terrorist organisation have so far been killed in Iraq."

Most of ISIL's armament capabilities also have been destroyed, he said.

"We expect that by the end of the current year or next spring, not a single city or area will remain under ISIL control," al-Hashemi said.