Mexican officials said the decision to pay off the so-called Brady bonds 16 years before they come due is proof the country has separated itself from the herd of the highly indebted Latin American nations.
But many Mexicans, who have lived through repeated economic crises, wondered whether the celebration was premature.
Attending a Mexico City ceremony marking the repayment, U.S. Treasury Secretary John Snow hailed it as a victory for fiscally conservative, pro-market policies of President Vicente Fox and his most recent predecessors.
"This is a reflection of Mexico's success and the success of the global marketplace itself," Snow said.
Noting the emergence of new "market-oriented mechanisms" debt bonds that are easier to restructure and bankruptcy-style reorganization schemes for indebted countries, Snow said, "I hope there will not be a need for a new round of Brady bonds, or anything like them."
About $35 billion of the bonds named for former U.S. Treasury Secretary Nicholas Brady were issued in 1989 to refinance debts Mexico defaulted on in 1982, when free-spending populists and falling oil prices ran the country into bankruptcy.
Only about $1.2 billion remain outstanding and officials said the government will buy those back by the end of the year.
Many Mexicans still see debt as a labyrinth from which their country seemingly will never escape.
"We were born indebted, we've been bought and sold, and I expect we'll die that way," said David Mendoza, 56, who sells flowers on a Mexico City street.
Fox's uneven record of improving the foreign debt situation while accepting a mountain of bad private debts from a 1990s bank bailout gives fuel to optimists and pessimists.
As Mexico's credit rating rose in recent years, the interest rates it pays on its loans have plunged, from highs of near 20 percent in the dark days of financial crisis to about 5 percent annually today.
Replacing the Brady bonds with low-interest debt issues has saved taxpayers $800 million in debt servicing costs over three years, Treasury Department spokesman Raul Martinez said.
It also has added extra shine to Mexico's newfound reputation for solvency.
"Mexico has been able to differentiate itself from the majority of the economies of this continent," Martinez said.
Mexico City economist Jonathan Heath notes that Mexico's last period of low indebtedness, in the 1940s, ushered in nearly 40 years of high economic growth.
But the gains in foreign debt management have yet to be matched in the area of domestic debt, which ballooned in 1995 when the government rescued private banks by absorbing more than $70 billion in bad loans.
That siphons money away from spending on education, aid to the poor and other priorities.
The Fox administration went to court earlier this year to stop congressional auditors from trying to reduce the bailout debt by making the banks absorb bad loans made to bank officers and punitive interest charges.
"Instead of defending the taxpayers' interests, the government appears to be defending the interest of the bankers," said Jorge Calderon, a congressional candidate for the leftist Democratic Revolution Party, the PRD.
Martinez, the government spokesman, said the Fox administration objected to the bank audits on jurisdictional grounds, arguing that congress doesn't have the authority to act in the case. But he refused to say if Fox would insist the debt be lowered.
Some of the biggest changes since the 1980s have occurred among the populists, whose tax-and-spend policies got the region into trouble in the 1980s.
In Brazil, populist President Luiz Inacio Lula da Silva was elected in a landslide — and promptly began slashing spending and proposed reforms of the tax and pension systems to achieve a more balanced budget.
In Mexico's PRD, talk of good debt management and fiscal responsibility has largely replaced angry attacks on creditors.