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Rating agency Fitch revises upwards its outlook on Ireland to stable

RATING agency Moody's has published a highly favourable report on the efforts to restore Ireland's financial health.

And competitor Fitch also revised upwards its outlook for Ireland to stable from negative.

Fitch affirmed its rating for Ireland at BBB+, but upgraded the outlook to stable

It expects the 2012 deficit to be close to the target of 8.6pc of GDP.

Moody's, in its annual report on the Irish state finances, reiterated its "Ba1" credit rating for the country but said Ireland is benefiting from a "relatively predictable policy framework, commitment to fiscal consolidation and structural reforms", and the fact that it has hit all of the objectives set by the EU/IMF/ECB.

The rating agency said the country benefits from a business-friendly tax environment and a flexible workforce that have helped regain lost competiveness but risks remain because of the eurozone debt crisis.

Ireland is seen to be making progress in returning to debt markets and meeting its fiscal targets.

It all means Moody's no longer sees any risk of "Greek style" losses for holders of Irish government bonds.

However, the agency has not lifted its Irish rating back above so called "junk" status and says the outlook is still negative.

That negative outlook reflects the risk that austerity measures may not be fully followed through, especially because of the weakness in the Irish economy. It is also driven by the ongoing "debt crisis" in the wider euro area, which remains a significant risk.