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Highland Council has ambitious plans to transform its services over the next 20 years but needs to control its borrowing costs, a public finance watchdog has said.
The Accounts Commission said the local authority should be commended for having a "culture of transformation" after restructuring its management last year.
But in a new report it warned the council could find it challenging funding its capital programme, which includes plans to build new schools and improve roads,
It said Highland Council's borrowing costs were a "concern" and higher than the average for Scotland's 32 local authorities.
Council convener Bill Lobban said the report was "broadly positive".