U.S. credit ratings agency Standard and Poor's has raised its outlook on Ireland and forecasts the bailed-out country's debt levels could be cut more quickly than expected.

The ratings agency kept its risk grade on Irish debt securities at BBB+ but improved the outlook from stable to positive, suggesting a possible rating hike. S&P cites Ireland's commitment to austerity as a key reason for the decision.

Friday's report offered Ireland a boost after figures last month revealed a slip back into recession for the first time since 2010. Ireland had been the only bailout recipient, alongside Portugal and Greece, to achieve growth despite four years of austerity.

Ireland plans a further 3.1 billion euros ($4 billion) in tax hikes and cuts as it seeks to resume normal borrowing this year.