Iran government moves to revise budget after parliamentary rejection

In a post on X, Pezeshkian said he had ordered Interior Minister Ahmad Vahidi to “listen to the legitimate demands of protesters” and help the government “respond responsibly.”

Pezeshkian said improving people’s livelihoods remains his “daily concern,” and that reforms to the banking and monetary system are on the agenda.

But it remains unclear how the dialogue he has proposed will work or whether it can contain protests that are increasingly political in tone.

The unrest began with anger over the surging price of the US dollar and the collapse of the rial but quickly broadened.

Strikes and demonstrations spread nationwide on Monday, turning violent in several cities as nighttime crowds chanted against the ruling system and bazaar merchants vowed to continue their shutdowns.

In Tehran, large parts of the Grand Bazaar were shuttered, while clashes were reported in central streets.

While the slogans were mainly focused on economic issues on the first day, the second day's chants underscored a transition from economic frustration to more explicit political dissent.

Chants in several cities targeted Iran's political authority, with crowds shouting slogans such as "death to the dictator" and "Seyyed Ali (Khamenei) will be toppled this year".

The turmoil has been fueled by a currency crisis that pushed the dollar to roughly 144,000 tomans over the weekend. The head of Iran’s central bank resigned amid the turmoil, and Pezeshkian appointed former chief Abdolnaser Hemmati in a move seen as aimed at calming markets.

The Majlis’ joint budget committee voted 32–9 against the bill’s general outlines on Monday, citing concerns that the proposal would fuel inflation, further erode household purchasing power and rely on revenue assumptions lawmakers fear will not be met.

The committee said its report rejecting the bill will now be sent to parliament’s leadership for debate in an open session, where lawmakers will decide whether to return the budget to the government for revision.

The budget had been formally submitted to parliament last week, as Iran grapples with mounting fiscal pressures, a sliding rial and rising public discontent over living costs.

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  Iran president says budget cannot match wages to inflation

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.