The ratings agency S&P has returned Greece's credit rating to investment grade for the first time since 2010, citing the "significant progress" it has made in tackling economic challenges.

S&P is upgrading the country's credit rating to BBB-/A-3 from BB+/B for long- and short-term local and foreign currency sovereign credit ratings, it announced in a statement Friday.

Its decision makes it the first of the three major US ratings agencies to lift Greece's credit rating from speculative to investment grade.

"Greece's public finances are improving thanks to the budgetary consolidation efforts," it said, explaining its decision.

"Since the debt crisis in 2009-2015, significant progress has been made in addressing Greece's economic and fiscal imbalances," it added.

S&P expects the government to achieve a primary surplus of "at least" 1.2 percent of GDP this year, well above target, growing to 2.3 percent of GDP over the next three years.

The general election earlier this year that returned Kyriakos Mitsotakis to power "allows the government to continue to build upon past reform efforts" to make Greece internationally competitive, S&P said.

"We expect additional structural economic and budgetary reforms, coupled with large EU funds, will support robust economic growth in 2023-2026 and underpin continued reduction in government debt," it added.

Mitsotakis cheered the decision by S&P as "an important milestone."

"Proud of the recognition of what our country has achieved. We are determined to continue our reform agenda, a path that is attracting investment, creating jobs and achieving inclusive growth," he said in a post on X, formerly Twitter.