S&P Global Ratings kept its rating unchanged on Friday, giving President Cyril Ramaphosa leeway to move forward with reform.

This is in line with expectations that the ratings agency would adopt a wait-and-see approach following the ANC's victory at the polls earlier in May. It is one of two agencies that rate the country’s creditworthiness at sub-investment grade. A fall further into junk territory would have increased the country’s cost of borrowing.

S&P kept the rand-denominated debt rating at BB+, the first notch of sub-investment grade, and the foreign-currency rating at BB, which is two notches below investment grade, and maintained a stable outlook.

"The stable outlook reflects our view that, with the elections now over, the South African government will pursue some reforms and attempt to improve economic growth and try and contain fiscal deficits," S&P said in a statement on Friday night.

"Our ratings on SA are constrained by the weak pace of economic growth, particularly on a per capita basis, as well as its large and rising fiscal debt burden, and sizable contingent liabilities."

This comes ahead of Ramaphosa’s cabinet announcement, which will follow after his inauguration on Saturday. Last week, Ramaphosa said at a Goldman Sachs conference in Johannesburg that he would reconfigure the cabinet to propel the economy forward. 

The credit rating agency warned that it could lower the ratings if SA continued to see higher expenditure pressures, contingent liabilities manifest and if the economy weakened. It also warned of a downgrade if the rule of law or property rights were infringed on. However, SA could see an upgrade if economic growth and fiscal outcomes strengthened above current projections.

In line with the Reserve Bank on Thursday, S&P revised its growth forecast for this year to 1% citing power cuts and a contraction in the first quarter. Over the medium term, growth was expected to reach 1.9%.

In April, S&P associate director and primary credit analyst for SA Gardner Rusike said an ANC win would be likely to result in a continuation of structural reform that would encourage investment, which in turn would lead to higher economic growth, but that this remained too low for a ratings upgrade.

S&P was the first of the big three ratings agencies to react when former president Jacob Zuma fired respected finance minister Pravin Gordhan in a surprise cabinet reshuffle on March 31 2017. S&P cut SA’s foreign-currency bonds to junk status three days later. Fitch followed suit four days after S&P.

S&P left SA’s local currency debt — which accounts for about 90% of government bonds — at investment grade until November 2017.

The Treasury said in a statement shortly after S&P's statement that the main focus for government was to regain investment grade.

"This will be achieved by enhancing policy certainty and credibility, implementing growth-enhancing economic reforms, lowering the debt burden as well as restoring good governance and financial stability at public institutions and state owned companies, specifically Eskom," the Treasury said.