Ecuador’s finance minister has confirmed that her country will buy back nearly a third of its foreign debt at a 70 per cent discount, ending months of speculation about a possible default.

Minister Maria Elsa Viteri said on Monday the government will buy back about £2.2 billion in Global 2012 and 2030 bonds, worth about 32 per cent of Ecuador’s total foreign debt.

Bondholders have until May 15 to bid or make a counter-offer on the government’s terms.

Ms Viteri said that the government expects to have details of the final deal by the end of May.

A government audit last year determined that conditions surrounding the debt sale had rendered the bonds ‘illegal and illegitimate,’ prompting President Rafael Correa to order the refinancing.

Mr Correa explained ‘the source of the debt’s illegitimacy was its overvalue when it was renegotiated in 2000, when our country was in shambles.’

Economy Minister Diego Borja has stressed that settling with the bondholders is one of the left-wing government’s top financial goals.