BELFAST, Northern Ireland -- Standard and Poor's raised its outlook on Ireland and forecast Friday that the bailed-out country's debt levels could improve more quickly than expected as the export-focused economy recovers and government income grows.

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

S&P often has been the most optimistic among the big three ratings agencies on Ireland's prospects to recover from a crippling bank-bailout program that forced the country to negotiate a 2010 emergency loan package from European partners and the International Monetary Fund.

Moody's, in stark contrast, has graded Ireland's debt securities as Ba1 junk bonds and kept the country on negative outlook. Fitch, like S&P, gives Ireland an investment-worthy BBB+ grade but retains its stable outlook.

S&P said it expects Ireland's cumulative government debt to peak this year at 122 percent of gross domestic product and decline to 112 percent by 2016, reflecting hopes of modest GDP growth and strengthening government revenues amid continued budget cuts. It noted that unemployment has already declined to 13.6 percent from a 2012 peak of 15.1 percent.

And it cited the possibility that Ireland's state-run "bad bank," which is responsible for handling the toxic debt of six rescued Irish banks, could prove unexpectedly successful in selling off its mammoth portfolio of half-built housing developments, shopping malls and derelict development land. The National Asset Management Agency has sold off assets conservatively over the past three years due to Ireland's shell-shocked property market, where prices are stabilizing at roughly half of their peak 2007 levels.

The S&P report offered Ireland a boost after government figures last month revealed that the country in the first quarter of 2013 slipped back into recession, albeit by a narrow margin, for the first time since 2010.

Ireland had been the only bailout recipient, alongside Portugal and Greece, to achieve growth despite an aggressive four-year austerity program that has cut the average paycheck by more than 15 percent. Economists credit Ireland's performance chiefly to its use of low tax rates to attract foreign multinationals, including 700 U.S. companies that employ around 7 percent of the labor force and generate around a quarter of Ireland's entire economic output.

Ireland plans a further 3.1 billion euros ($4 billion) in tax hikes and cuts as it seeks to resume normal borrowing this year, when it is scheduled to become the first of the original three bailout countries to exit its bailout program.

The Irish treasury already has resumed limited successful debt auctions, including 10-year bonds, in anticipation of the EU-IMF funds drying up this year.