The Italian left-back enjoyed another solid campaign for the islanders and has been strongly linked with a move to the French giants.
Napoli, AC Milan and Lazio are also reportedly keen to land Balzaretti.
"A week ago I spoke with (Palermo president Maurizio) Zamparini," Balzaretti said to Corriere dello Sport. "I told him what my priorities are.
"Either I stay at Palermo or I go to PSG."
Palermo are willing to offer Balzaretti a contract extension with the player's current deal ending next summer.
The 30-year-old was a member of Italy's Euro 2012 squad that finished runners-up in Poland and Ukraine.
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