Iran’s judiciary on Monday denied reports that the country’s top political leaders had approved the retention of the central bank governor, pushing back against swirling speculation over his fate as the rial slides to record lows and economic pressure mounts.
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.
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.
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.
Hadi Kiadaliri, vice president of Iran’s Forestry Association, said studies show the country now holds the global record for soil erosion, a problem he attributed to unsustainable land use, water-intensive agriculture and weak integration of environmental limits into economic planning.
“Based on the results of one study, restoring soil fertility in the Zagros would require allocating 50% of annual oil income,” Kiadaliri told ISNA news agency, calling the cost a measure of how deeply natural capital has been depleted.
The Zagros range stretches across western Iran and underpins large parts of the country’s water cycle, biodiversity and rural livelihoods. Environmental experts have long warned that erosion, deforestation and overgrazing in the region threaten food security and increase flood and drought risks.
Kiadaliri said Iran’s development path had relied heavily on expanding agriculture despite the fact that about 93% of the country is classified as arid or semi-arid.
Between 2004 and 2020, he said, farmland expanded by around 3.6 million hectares, largely at the expense of forests and rangelands – an average loss of about 500 hectares of natural land per day.
Water resources have also been overexploited to sustain agricultural output, he said, arguing that food security had been narrowly defined as supply rather than resilience. “Environmental resilience is part of food security,” Kiadaliri said, adding that ignoring it has undermined long-term productivity.
He said international experience shows that environmental protection and economic development are not mutually exclusive, pointing out that no highly developed country has achieved sustained growth while degrading its natural environment.
Iranian officials have increasingly acknowledged environmental stress as climate change, drought and land degradation intensify.
The Department of Environment has recently pushed to formally value ecosystem services – such as water regulation, soil protection and carbon storage – a step Kiadaliri said could make environmentally damaging projects economically unviable once their true costs are accounted for.
“If ecosystem services are properly valued, many projects will no longer make financial sense,” he said, arguing that such accounting could curb further environmental damage.
Environmental groups say without structural changes in land management, water use and development planning, Iran’s soil erosion will continue to accelerate, raising long-term economic and social costs far beyond the immediate price of restoration.
