Moody's upgraded Greece to B3 from Caa2, with a positive outlook, citing "material" improvements in the country's fiscal and institutional profile.

The rating agency said the country performed better than expected under its current third adjustment program, with the government achieving primary surpluses in excess of 2% of GDP. B3 is six notches below investment grade.

The improvement came on the back of structural measures, which are expected to have "lasting fiscal benefits," including reforms to the income and value-added tax systems, as well as to pension and healthcare spending, Moody's said.

The European Commission projects that the cumulative benefit of these structural fiscal measures will be equivalent to 4.5% of GDP by the end of 2018.

Moody's said that Greece's budget targets are likely to be met as automatic tax increases and spending cuts will help achieve the primary surplus target of 3.5% of GDP for 2019 to 2022. Public debt is projected to decline to just above 174% of GDP in 2019 from a peak above 181% in 2017.

Moody's kept its real GDP growth forecasts of 2% and 2.2% for 2018 and 2019, respectively, saying that it is "more confident than before that these forecasts will be realized."

The agency also said that Greece is on track to complete its third support program in August, suggesting its return to market funding with a projected cash buffer of at least €18 billion.

The risk of another default has "materially declined" as the risk of reversal or derailment of current fiscal progress is now "materially lower," it said.

Moody's could consider further ratings upgrade if current reforms are sustained.

On Feb. 19, Fitch lifted its long-term foreign-currency issuer default rating on Greece to B from B- on expectations that the country's general government debt sustainability would improve.