MANCHESTER -- Manuel Pellegrini said Manchester City can afford to sign Wilfried Bony because of the funds they will receive for Alvaro Negredo.
And he revealed City decided to bring in another striker immediately after Negredo left to join Valencia on the final day of the summer transfer window.
The Spain international will sign a permanent deal with the La Liga club in the summer, which will be worth 30 million euros to the Premier League champions.
City are limited to a 49 million-pound net spend this season as part of their punishment from UEFA for breaching Financial Fair Play and have spent about 35 million pounds more than they have received in the last eight months. But manager Pellegrini revealed that UEFA will allow them to use Negredo's transfer fee now.
"We sell already Alvaro Negredo so we have some money to spend," he said in a news conference.
City are in talks with Swansea about Bony, who could cost as much as 30 million pounds and whose agent has said a deal could be completed within days.
While Pellegrini was reluctant to discuss the Ivory Coast striker by name, he has always preferred to operate with four strikers in his squad.
Negredo's departure left him with just Sergio Aguero, Edin Dzeko and Stevan Jovetic and he added: "We are going to replace Alvaro Negredo because it was the decision that we took in the moment we sold him. We need another striker so we are going to find which is the best player to bring in."
A move for Bony would mean City would have to omit one foreign player from their Champions League squad.
They are permitted 17 non-homegrown players in the Premier League but, as another part of their sanction in the Champions League, only 16 for European competitions, prompting speculation that Stevan Jovetic, Aleksandar Kolarov or Bacary Sagna could miss out.
And Pellegrini will delay the decision for another few weeks, explaining: "At the moment, if we bring another player, we must see which of the players will not be in the squad for the Champions League because we don't have space but it is a decision we must take around the middle of February."
City risk losing the versatile James Milner on a free transfer in the summer, when his contract expires.
Liverpool are reportedly interested in signing Milner but Pellegrini believes the 29-year-old is likely to pen a new deal at the Etihad Stadium.
He said: "I think James wants to stay here and we want James here so I hope he will sign his contract."