Ratings agency Fitch said it would take several years before Ireland returns to "A" credit status, after it downgraded the country three notches.
Analyst Chris Pryce also said there was a risk Ireland would be forced to restructure its debt but that was not, in his view, the most likely scenario.
"We do not assume that Ireland is inevitably going to restructure. Clearly there is a possibility, but it's not our leading assumption by any means," he said.
Fitch was the first among its peers to strip the country of its "A" rating to BBB+, following the Government's request for an €85 billion EU/IMF bailout. It said its outlook on the rating was stable.
Fitch said that while Ireland had received relative security from the package, the fiscal costs of restructuring and supporting its banks had triggered the cuts.
"Fiscal consolidation will last at least three, if not four or five years and it will take them a long time to get back with workable public finances," Mr Pryce said today.
"Irish people will have to tighten their belts more than they have tightened them."
The Government detailed a tough budget earlier this week, the first in a four-year cycle of cutbacks totalling €15 billion, and a key plank of its agreement with the IMF and Europe.
The Dáil will vote on changes to public sector pensions today, the third of four pieces of legislation underpinning the budget.
Following the sovereign downgrade, Fitch today downgraded the ratings of Allied Irish Banks and Bank of Ireland long- and short term issuer default ratings to BBB from A- and F2 from F1.
Fellow ratings agencies Moodys and S&P have Ireland on Aa2 and A respectively but both have put the country's sovereign rating on review for a possible cut.
Moodys said late last month that a multi-notch downgrade was the most likely outcome of a review expected to be concluded by early January but that Ireland would still remain within the investment-grade category.
Ireland is still higher than the BBB- rating - one step above junk status - that Fitch gave bailed-out euro zone member Greece earlier this year.
Reuters