Liberia has reached a deal with two firms on debts dating from the 1970s.
The Caribbean-registered companies - Hamsah Investment and Wall Capital - agreed that Liberia would pay back just over 3% of the $43m (£27m) it owed.
The companies are among what critics call "vulture funds", which buy up the defaulted debts of poor countries then demand swift repayment.
Liberia's Finance Minister, Augustine Ngafuan, said the country would never again build up such huge debts.
Liberia has lost court cases in both London and New York over its debts to the firms.
The 2009 London ruling ordered Liberia to pay $20m (£12m) - then equivalent to about 5% of the national budget.
The original details of the case are still unclear, but it is thought Liberia borrowed $6.5m (£4.1m) from the US-based Chemical Bank in 1978 and that debt may have been resold a number of times.
Liberia had vowed to challenge the order to repay the debt but it now seems to have decided that reaching a settlement would be the easier option.
It is not known why the money now owed has risen to $43m (£27m).
Nick Dearden, of Jubilee Debt Campaign, told the BBC's Network Africa programme such funds worked by "harassing" poor, indebted countries.
"They try to extract money from anyone trading with or investing in the country in question so, in the end, the country feels it doesn't have much option."
But he pointed out that "Liberia got a pretty big discount on the debt".
Mr Ngafuan said: "We had to take extraordinary measures to ensure that monies coming to Liberia were not seized. It was a tough year."
He said Liberia now had the structures in place to ensure that it did not rack up debts it could not afford to repay.
Liberia is struggling to rebuild after a 14-year civil war, which ended in 2003.