And it says Queensland could regain its AAA rating within two years.

On Wednesday, the agency announced it was keeping Queensland's rating at AA+/A-1+, which is just below a triple-A rating.

It said the rating was based on Queensland's very strong economy, exceptional liquidity, strong financial management and budgetary performance, and low contingent liabilities.

But it said Queensland's "average budgetary flexibility" and high debt burden partially offset the strengths.

"The state government is focused on implementing its debt action plan and in the recent 2016-17 budget announced that it would repatriate about $4 billion in excess superannuation assets to repay debt and fund infrastructure, while maintaining its fully funded nature," the agency said.

It said the policy, and others, would help reduce the state's tax-supported debt to 124 per cent of operating revenues in 2019 from 135 per cent in 2015.

The agency also pointed to the plan in the latest budget to use $3.4 billion of long service leave assets to repay debt and fund leave liabilities on an emerging basis, and temporarily suspending contributions to its "overfunded defined benefits scheme".

Treasurer Curtis Pitt said the announcement from Standard and Poor's was fantastic news.

"It recognises that our debt action plan is working, it acknowledges the elements in that debt action plan, including the repatriation of the defined benefits scheme, as being key elements to helping to reduce our overall debt in Queensland."

The report says while the economy is wealthy, growth has been slow over the past two years.

But redundancies under the former Newman government did help balance the books, with the government generating an operating surplus of 8 per cent in 2015, after being in deficit by more than 3 per cent in 2013, the agency said.

"This improvement reflects the reduction of 14,000 full-time equivalent positions in fiscal 2013, reducing employee expenses by 5 per cent in 2014, and conveyance duties and GST receipts rising substantially," the report reads.

Mr Pitt said the previous government in its "headlong pursuit of regaining a AAA credit rating" damaged the economy, by cutting services and jobs.

"We've shown that the debt reduction task was possible without asset sales, without massive cuts to jobs and services," he said.

Standard and Poor's said upward ratings pressure could occur in the next two years – with the possibility of an AAA rating – if the government successfully implemented its debt action plan and contained expenditure growth.

"We may well see an upgrade to our credit rating within the next two years," Mr Pitt said.

Shadow Treasurer Scott Emerson said the rating update showed there was no benefit from Labor's budget raids.

"Short-sighted raids on superannuation, long service leave and shifting debt on to government-owned businesses has done nothing to improve Queensland's financial position," Mr Emerson said.

Mr Emerson said Labor's management of the budget could "potentially lead to a downgrade in future years".