Spain's new government lifts financial controls on Catalonia

Spain's new government has promised to lift Madrid’s financial controls on Catalonia in what it said it was a "gesture of normalization." An independence referendum for the region remains out of the question.

Banks will be instructed to allow the government of Catalonia to make payments without the supervision of Spain's finance ministry, education minister and government spokeswoman, Isabel Celaa, said on Friday.

The Catalan government will still have to provide a monthly spending report to the central government, Celaa told reporters after the first Cabinet meeting since Socialist Party (PSOE) Prime Minister Pedro Sanchez came to power last week.

Madrid had been supervising Catalan finances since 2015 to ensure no public money was funding illegal pro-independence activities, but controls were tightened by the conservative government of Mariano Rajoy in September 2017.

Rajoy said this was to stop the separatist regional government of Catalonia from financing a banned independence referendum on October 1. The referendum was boycotted by the opposition and declared illegal by Spanish courts.

Read moreOpinion: Catalan nationalists transfixed on the past

Pedro Sanchez

Spain's new prime minister Pedro Sanchez in parliament in Madrid, June 1

Independence referendum: no way

The new premier will meet with Spain's 17 regional government heads, including Catalonia's new president, Quim Torra (pictured above), who has said independence for the region remains his top priority.

Celaa said the government was not willing to discuss the possibility of Catalonia holding an independence referendum, as demanded by Catalan separatists. "This is out of the question," she told reporters.

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