RIGA (AFP) Latvia has escaped bankruptcy, its prime minister insisted, as the recession-hit EU state's parliament approved deep spending cuts to win a crucial tranche of an international bailout.

In a 63-30 vote, lawmakers backed new austerity measures worth 500 million lats (714 million euros, 991 million dollars), or around 10 percent of total expenditure.

"Parliament made a difficult decision, one that allowed the state to avoid bankruptcy," Prime Minister Valdis Dombrovskis told reporters after the eight-hour debate.

"We think it's a good basis for continuing to receive international support," he said.

The cuts were a crucial plank of Latvia's pledges to lenders including the International Monetary Fund and European Union.

In a statement John Lipsky, the IMF's first deputy managing director, welcomed the "important and courageous measures" adopted Tuesday, adding that lenders were now assessing them.

The European Union called the cuts "a courageous and ambitious step forward to address fiscal imbalances".

Riga won a 7.5-billion-euro (10.4-billion-dollar) lifeline in December from the IMF, EU and other lenders including Sweden, a top investor in the Baltic state which has feared that a Latvian meltdown could spill into its own economy.