Australia's pristine AAA sovereign rating is not at "immediate risk" from the fiscal and economic impact of bush fires raging across the country's east coast, S&P said yesterday.

"We do not believe that these bush fires will affect credit metrics enough to trigger rating changes in the next one to two years," said S&P Global Ratings credit analyst Anthony Walker.

Ratings on the east coast states of New South Wales and Victoria - the most ravaged by the fires - were also likely to be unaffected, S&P said.

"We believe there is capacity within our current ratings on the sovereign and state governments to absorb the fiscal costs, which are relatively small compared with their budgets," Mr Walker added.

The fires which broke out three months ago have killed 28 people, destroyed more than 2,000 homes and burnt millions of hectares of land. The crisis is becoming increasingly political as the country looks at the causes and the government's response.

Westpac economists on Friday estimated total fire losses to date at about A$5 billion (S$4.6 billion). The bank forecast a 0.2 to 0.5 percentage point hit to gross domestic product.

Australia's A$1.95 trillion economy was already slowing after 28 years of recession-free expansion before the crisis.

REUTERS