Queensland Premier Anna Bligh said on Friday that the state government is set to absorb losses of at least $5 billion due to the recent flood disaster and most likely reduce its economic growth prospect for the rest of the year.

Premier Bligh told reporters in Brisbane that damages wrought by the floods would lead to growth declines by up to 1.25 percent for the first half of 2011, retreating from the three percent guidance previously set.

Also, Ms Bligh said that Queensland's budget surplus for the year would suffer reductions that lead to $5.66 billion, coming from the surplus estimate of $6.4 billion before the disaster.

The capital's rail project will also be delayed by the financial limitations arising from the problems left behind by the flooding, added the premier.

The Queensland government has earlier flagged that this year's budget would need major adjustments that would deal with the tasks of rebuilding and restructuring in the aftermath of the floods that devastated areas in the state.

Ms Bligh clarified that the figures released by the government represented "an early estimate and we may see a higher cost than that."

Torrential rains that hit the state for weeks, which started as early as December, left behind 32 dead, tens of thousands damaged properties, halted the state's mining operations, derailed its rail networks and destroyed tonnes of crops, according to the Queensland government.

Also, the devastation, according to the federal government, far extended into regions of New South Wales and Victoria, easily making the disaster a wide-ranging national crisis.

In her attempts for a more effective commonwealth response to the daunting responsibility of rehabilitating the country, Prime Minister Julia Gillard proposed a flood levy that would collect a total of $1.8 billion from Australian middle and high income earners.

Ms Gillard also acknowledged that the national economy is poised to cut 0.5 percent of growth in the first six months of 2011 but she remained optimistic that despite the effects of the disaster, a pledged surplus of $3.1 billion in 2013 is achievable.