Armengol with Pedro Sanchez. | Morey

Pedro Sánchez made clear in Palma on Wednesday that the Spanish government is not in a position - for legal reasons - to approve payment of 177 million euros that are owed to the Balearic government. It is not legally possible, he stressed, to compensate the Balearics or any region while he and the government operate in an acting capacity.

The prime minister, still hopeful of arriving at agreements with other political parties to enable his investiture and a PSOE-led administration, said that if he were to form a new government, his priority would be reform of the financing system for the regions. He has already made this commitment to the PSOE president of Valencia, Ximo Puig.

Sánchez, who met another PSOE colleague on Wednesday, President Armengol, stressed the need for investiture agreement to enable a progressive socialist administration without a dependence on backing from independence parties. Armengol, aware of the non-payment of the Spanish government's debt, suggested that an objective of achieving a zero deficit will have to be deferred. She added that there is no hole in the government's accounts as money for the budgets will arrive sooner or later.

Armengol reiterated the need for reform of the regional financing system and for fiscal measures promised for the special economic regime for the Balearics to be worked on as soon as the new government is formed.