Ratings agency Moody's has upgraded its sovereign credit rating for Ireland from A2 to A1 with a positive outlook.
The new rating is the highest provided to Ireland by Moody’s since 2010 and its first upgrade since 2017.
The agency said it had taken the decision because the Covid-19 pandemic and exposure to Russia's invasion of Ukraine have both demonstrated that Ireland's economic resilience has increased.
"While there is still uncertainty around the ultimate macroeconomic impact coming from the terms of trade shock caused by higher prices for energy and other inputs to economic activity, the Irish economy is well-positioned to absorb the negative impact of the conflict," it said.
"The impact of any international agreement on corporate income tax reform also appears manageable. Ireland's size and openness make it more vulnerable to shocks."
"Nevertheless, Ireland's doubling of size as measured in GDP in the last ten years, its strong track record of growth and growth potential, and competitiveness help to mitigate these vulnerabilities."
It also said that Ireland's government debt has declined against the backdrop of robust economic growth.
Moody's said that it expects that this decline will continue in coming years.
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"Strong economic growth and improving fiscal fundamentals - including six years of primary surpluses -put Irish debt ratios firmly on a declining path in the years leading up to the pandemic," Moody’s said.
"While the government provided substantial support to the domestic economy, this had only a very marginal impact on the debt ratio because of the economy's underlying resilience and favourable performance of tax revenues."
"This meant that the pandemic did not set back the process of reducing debt ratios and improving the resilience of the government's balance sheet."
It added that it expects a further fiscal improvement, with a smaller fiscal deficit this year and a return to surplus in 2023 as temporary pandemic support measures are withdrawn and strong economic activity boosts tax receipts.
Moody's also maintained Ireland's short-term rating at the highest level of P-1.
"This is a strong endorsement of the resilience of the Irish economy," said Frank O'Connor, National Treasury Management Agency Director of Funding and Debt Management.
"It is the third upgrade by a major ratings agency in recent months, following upgrades by DBRS Morningstar and Fitch earlier in the year."
"This pattern of upgrades adds to the existing positive sentiment among investors towards Irish sovereign debt, which strengthens our ability to attract a deeper pool of investors and increase liquidity in our issuance."