It said on Wednesday it believed there would be policy continuity and fiscal consolidation.
The agency said it believed that the present government under President Jacob Zuma would ensure broad policy continuity, and it foresaw the African National Congress winning the 2014 election.
It said fiscal consolidation remained on track but expressed concern that it may become exposed to pressures from public sector wages, development needs and lower than expected growth. It said structural and rising current account deficits could see an increase in South Africa's dependence on external financing.
The report said: "The outlook remains negative, reflecting our view that recent lacklustre economic performance, increasing external imbalances, and potentially resurging labour tensions could affect South Africa's macroeconomic policy framework beyond our current expectations."
However, national treasury responded saying that S&P's did not consider recent positive developments in South Africa when it affirmed the country's credit rating and negative outlook.
National development plan
"Although national treasury notes S&P's rationale … government's view is that the rating opinion did not take adequate account of the positive developments over the past six months since the previous rating announcement," it said in a statement.
Treasury said the adoption of the national development plan by the ANC; more details on the plan in the 2013 Budget; the "peaceful" ANC election process in Mangaung; and the re-affirmation of the economic policies in the State of the Nation address were not acknowledged.
"Government has re-affirmed its commitment, in the 2013 Budget, to bring down to slightly above 40%," it said.
"While there are risks to growth, our fiscal framework remains realistic and achievable."
It said the government would continue to invest in infrastructure, while enhancing the productive capacity of the economy and the competitiveness of industries.
"This will be done in a manner consistent with fiscal sustainability." – Additional reporting by Sapa