Ratings agency Standard & Poor's has raised Ireland’s long-term sovereign credit ratings to 'A’, up from its previous rating of ‘A-‘.
The firm also upgraded the country’s short term debt to ‘A-1’, up from ‘A-2’ and said it had a stable outlook on both categories.
S&P said the country’s economic prospects had improved in the past year and upgraded its average GDP growth projections for 2014-2016 to 3.7% - up 1%.
It said inflows from foreign direct investment had proven to be exceptionally high in recent years, while strong GNP growth suggested a strong recovery in the domestic economy too.
The agency also pointed towards improving jobs figures in recent months, as well as the fact that the National Asset Management agency was ahead of schedule in its repayment of Government bonds.
S&P said it expected last year’s net general government debt of 117% GDP to be its peak, with the figure falling to 91.4% by 2017.
This pace of debt reduction – along with the general pace of economic growth – set Ireland apart from the rest of the euro zone, it said.
Minister for Finance Michael Noonan welcomed the upgrade, saying it was “further evidence that our economic recovery has firmly taken hold”.
“The upgrade reflects Ireland's solid economic growth prospects, the continued strong management of the public finances, and the progress that NAMA and the Irish banks are making.”
Chief executive of the National Treasury Management Agency said the upgrade concluded “a very positive year for Ireland’s credit ratings.”
He pointed out that the country’s ratings had been significantly upgraded by all of the main ratings agencies since the start of the year.
“We believe that Ireland's policy and institutional effectiveness is supported by the strong consensus - among most of its largest political parties - in favour of fiscal consolidation and policies aimed at promoting economic flexibility, competitiveness, and openness,” S&P said.
“In our opinion, under the IMF/EU bailout programme, Ireland's government has generally strengthened its regulatory and legal framework.”
S&P said it could raise Ireland’s rating further if GDP growth continues to outpace current forecasts, if the Government and NAMA continues to pay down its debt at a faster-than-expected rate, or if banks’ asset quality improved significantly.
However it warned that the ratings could come under pressure if the economy began to weaken again, if debt reduction slowed or if banks’ balance sheets began to degrade.
It also said that any significant exodus of multinational firms currently based here would impact Ireland’s current account surplus.
