Latvia's Prime Minister Valdis Dombrovskis says bankruptcy for his country has been averted.

The government, unions and employees have agreed to implement cutbacks that will save Latvia 700 million euros. Pensions will be decreased, civil servants will earn less and parents will receive less in child benefits.

The government hopes to be eligible for new European Union and International Monetary Fund loans. Latvia's economy shrunk during the first quarter of this year by almost 20 percent and unemployment is on the rise. The country has been an EU member since 2004.
 

photo by Valsts kanceleja/flickr