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Newport City Council is “borrowing heavily” to fund school improvements, its leader has said.

Cllr Dimitri Batrouni told colleagues the local authority’s total borrowing increased by £31.3 million in the last financial year.

The figure, which this April stood at £168.4 million, is “above the council’s operational boundary”, councillors heard at a meeting this week.

However, that limit is “a management tool for in-year monitoring”, said Cllr Batrouni, who added it was “not significant if the operational boundary is breached on occasion due to variations in cash flow, and this is not counted as a compliance failure”.

“In layman’s terms, we’re borrowing heavily on our school rebuilding programme,” the leader explained. “Our schools need huge amounts of investment. It’s the right thing to borrow.”

He added the council would “need to manage that carefully, given interest rates”, but said he hoped the Bank of England would “follow through” on indications lower rates were on the horizon.

“Our outlook for the next few years is a further need to borrow as our capital programme is delivered and our reserves are used over time,” said Cllr Batrouni.

“Officers will continue to monitor interest rates closely to ensure we always get the best interest rates for any new borrowing, and liaising with our external treasury advisers,” he added.