Iran lawmakers reject draft budget, flag revenue risks and inflation fears

Mehdi Tabatabaei, deputy head of communications at the president’s office, said on X that President Masoud Pezeshkian had decided to name Hemmati as central bank governor.

The move follows days of conflicting reports over the fate of Mohammad Reza Farzin, who had faced intensifying criticism as the rial slid to record lows and inflation accelerated.

Earlier on Monday, Iran’s judiciary denied reports that senior political leaders had agreed to retain Farzin, saying no such decision had been taken and that the matter fell solely within the president’s authority.

Later, the president’s office confirmed that Farzin had submitted his resignation earlier in December.

Hemmati, a former governor of the central bank and ex-economy minister, returns to the post as Iran grapples with severe currency instability.

On Monday, the dollar was trading at around 1.41 million rials on the open market, while gold prices also hit record highs, triggering protests and strikes by shopkeepers in parts of Tehran.

Judiciary chief Gholamhossein Mohseni Ejei said those whose actions increase pressure on people’s livelihoods – whether deliberately or not – would be warned and, if they persist, prosecuted, according to remarks carried by state media.

“Those who, knowingly or unknowingly, put added pressure on people and their livelihoods and effectively move in the direction of the enemy’s objectives must be cautioned,” Ejei said. “If they do not heed these warnings, they must be seriously pursued and punished by the relevant authorities.”

Ejei framed economic disruptions as part of what he described as coordinated “psychological and economic pressure” by Iran’s adversaries, saying judicial authorities must respond decisively.

He cited laws allowing harsh penalties for acts deemed to constitute “corruption on earth,” a charge that can carry the death penalty, including in cases of large-scale economic disruption.

He said penalties such as fines were insufficient in the current climate. “These fines are not deterrent,” Ejei said, calling for punishments proportionate to current conditions.

The judiciary chief also stressed that responsibility extended beyond traders to officials who enable economic violations. He warned that individuals inside government bodies who facilitate hoarding, smuggling or currency abuses would face prosecution.

Addressing currency volatility, Ejei said authorities must identify those responsible for market instability.

He cited figures from central bank officials indicating that around $18 billion in export revenues had not been returned to the country.

The warning comes amid sharp falls in the rial, accelerating inflation and protests by shopkeepers in Tehran over rising costs and economic mismanagement.

In a statement carried by state media, the judiciary’s media center said reports that a decision by the heads of Iran’s three branches of power had endorsed the continuation of Mohammad Reza Farzin as central bank governor were “not true.”

“No decision was taken in the meeting of the heads of powers regarding the retention of the central bank governor,” the statement said, adding that the matter falls within the authority of President Masoud Pezeshkian.

The denial follows two days of conflicting reports in Iranian media over whether Farzin had resigned, been dismissed, or would remain in office.

Some outlets reported that Farzin had submitted his resignation earlier in December and that a committee had begun reviewing candidates to replace him, while others said he had been kept on with the backing of senior political leaders.

Later on Monday, the president’s office confirmed that Farzin had submitted his resignation, but said it had not yet been approved by the president.

The judiciary’s clarification came as Iran grapples with a sharp deterioration in economic conditions, marked by a steep fall in the rial and accelerating inflation.

On Monday, the US dollar traded about 1.41 million rials on the open market, while gold prices also hit record highs, prompting protests and strikes by shopkeepers in parts of Tehran.

Farzin, who was appointed under former president Ebrahim Raisi and retained after Pezeshkian took office, has faced growing criticism from lawmakers over currency instability and the central bank’s handling of foreign exchange shortages.

Reports of tension between Farzin and members of parliament surfaced earlier this month during a closed-door session ahead of the government’s submission of its draft budget, with some media saying the governor offered no new solutions to curb currency volatility.

President Pezeshkian has acknowledged the strain caused by energy subsidies and foreign exchange pressures, but has said the government lacks the resources to shield households fully from inflation.

Traders in the historic Chaharsouq bazaar joined the strike, while Tehran’s gold market remained shut and shopkeepers gathered for a protest on Lalehzar Street.

Merchants at other markets, including Jafari bazaar and parts of the Shoush wholesale district, were also reported to have stopped work.

The latest closures follow protests on Sunday by mobile phone traders outside the Iran Mobile Center and the Alaeddin Mobile Shopping Center on Hafez Street in central Tehran. V

ideos sent to Iran International showed crowds chanting antigovernment slogans, with passersby later joining demonstrations near Jomhouri Street.

Reports also circulated on social media of protests at Tehran’s Charsou mall, while iron market traders were said to have closed their shops to protest the currency’s decline.

The unrest comes as Iran’s rial slid to new record lows, weakening to around 1,445,000 per dollar on Sunday, compared with about 1,370,000 the day before and roughly 1,140,000 a month earlier, according to open market rates.

Iran has been grappling with soaring prices and currency volatility. Official data show food prices have risen by more than 66% over the past year, while year-on-year inflation reached 52.6% in December.

There were no immediate reports of security force intervention on Monday.

The Supreme Audit Court said in a statement that documented gasoline import costs had reached $1.8 billion by late December, adding that even under a high-end scenario, total imports for the full year would amount to around $2.7 billion, well below the president’s estimate.

Pezeshkian had told parliament earlier this week that the government spent about $6 billion importing gasoline this year, while budgeting roughly $8 billion in subsidized foreign exchange next year for essential imports, even as many goods were effectively priced at market exchange rates.

The president cited fuel and energy subsidies as a central distortion in Iran’s economy, arguing that higher consumption channels larger amounts of state support to wealthier households. He described the current system as inequitable and unsustainable, particularly as domestic fuel demand continues to rise.

The audit body warned against the use of inaccurate or unverified financial data in policymaking, saying that decisions on energy shortages and broader economic reforms should be based on “precise, transparent and verifiable information.”

The dispute comes as Iran grapples with chronic fuel shortages, rising imports and a widening gap between domestic production capacity and consumption. Officials have said inefficient vehicles, smuggling and low prices have pushed gasoline demand well beyond refinery output, forcing imports despite Iran’s status as a major oil producer.

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  Iran president says budget cannot match wages to inflation

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  Tehran shopkeepers protest currency plunge as rial hits all-time low

While the audit court challenged the scale of gasoline imports, it did not dispute broader concerns over subsidies, which economists say absorb tens of billions of dollars annually and weigh heavily on public finances.

A reformist daily, Etemad, said in an editorial on Monday that Iran’s budget debate reflects a deeper problem: a persistent gap between official plans and economic realities.

“The distance between what is written on paper and what happens in practice remains deep and worrying,” the paper wrote, adding that promises to reform spending and target resources have repeatedly translated into pressure on “transparent and productive” sectors rather than on inefficient or tax-exempt entities.

The editorial argued that quasi-state and semi-private companies continue to operate in a “safe zone,” contributing little in taxes despite controlling a significant share of economic resources. “A large portion of national resources circulates within this gray structure without an effective return to the public budget,” it said.

The paper also warned that a 25% rise in bond issuance signaled growing reliance on borrowing, shifting fiscal pressure into the future without generating sustainable growth.

The gasoline cost dispute adds to pressure on Pezeshkian’s government as lawmakers review the budget for the Iranian year beginning in March, against a backdrop of high inflation, currency weakness and public frustration over living costs.

The dispute unfolded as shopkeeper protests linked to the rial’s plunge continued in Tehran for a second day on Monday.