Standard & Poor's hikes Greek rating by 6 notches

The cutbacks and repeated tax hikes are meant to reduce the deficit, but they also hurt the economy. Greece has been in a deep recession that has cut economic output by 20 percent over the past five years and brought unemployment to a record high of 26 percent — with about 1,000 jobs lost every day since 2010.

Greece on Monday received a massive rescue loan installment worth €34.3 billion, after completing the bond buyback in which it paid €11.29 billion to cancel debt worth €31.9 billion.

The government said Tuesday that deficit cutting efforts remained on target, with the January-November shortfall at €12.9 billion, compared with €21.5 billion for that period in 2011.

S&P's Greek rating is the highest among the three main agencies. Fitch has Greece rated at one notch above default, while Moody's still lists the country as being in default.

Although Greece is unable to finance itself on long-term bond markets, it maintains a presence in short-term debt markets through regular auctions.

On Tuesday, it raised €1.3 billion ($1.71 billion) in a treasury bill auction at slightly lower interest rates compared with the last such sale five weeks ago.

The Public Debt Management Agency said the 13-week T-bills were sold at an interest rate of 4.11 percent, edging down from 4.2 percent rate last month.

S&P said that while bailout creditors assume that Athens will be able to return to bond markets by 2015, that access "remains subject to numerous domestic and external uncertainties."

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Derek Gatopoulos contributed to this report.