The ratings agency DBRS has upgraded Ireland's sovereign rating to 'A high' with a stable outlook -  an improvement of one notch on the DBRS scale.

The ratings agency also upgraded the short-term foreign and local currency issuer ratings to R-1 (middle).

In making their decision to upgrade, DBRS cited the materially improved outlook for Ireland's debt sustainability on foot of the strong economic recovery and progress made in reducing the fiscal deficit.

Minister for Finance Michael Noonan said: "This upgrade reflects the continued strength that we are seeing in the Irish economy underpinned by increasing domestic demand which is in turn feeding through to an improving budgetary and debt position.

"It can therefore be said to be a direct outcome of the policies pursued by the Government and the sacrifices made by the Irish people over the past number of years."

The upgrade has also been welcomed by the National Treasury Management Agency (NTMA).

Commenting on the report, NTMA Director of Funding and Debt Management, Frank O'Connor said: "It's pleasing to see the improvements in Ireland's debt dynamics reflected in this upgrade by DBRS."