Portugal's economic progress in recent years makes it increasingly difficult for the three main rating agencies to explain why they have left Lisbon with a junk investment grade, a top government official told CNBC on Thursday.

Speaking on the sidelines of the International Monetary Fund spring meeting in Washington, Portugal's deputy finance minister argued domestic reforms in one of Europe's beleaguered economies should not be dismissed simply as an act of "smoke and mirrors".

Moody's, Standard & Poor's and Fitch rating agencies all currently list Portugal as below investment grade level, which means the cost of borrowing is higher on sovereign and corporate issuers.

"I would say that these three rating agencies will have increasing difficulties in explaining why and how they've maintained the rating for such a prolonged period of time when Portugal in '17 is very different from Portugal in '14," Ricardo Mourinho Felix told CNBC Thursday.