Iran’s government spokeswoman said she recognised nationwide protests over living costs, in a bid to cool tensions which have been running high in recent hours due to the collapse in the country's currency and rampant inflation. 

As part of indirect efforts to calm the situation, authorities ordered a one-day shutdown of Tehran and other provinces, and the president moved to soften a contentious 2026 budget.

In unusually explicit remarks, government spokeswoman Fatemeh Mohajerani said the administration “sees and recognises” both protests and economic hardship, framing the demonstrations as livelihood-driven rather than political.

Iran's President Masoud Pezeshkian also signalled readiness to amend fiscal plans for the upcoming year to contain inflation and shore up social support, marking a change in tactic for the Islamic Republic, which has historically cracked down on street protests with deadly consequences. 

The change in tone aims to de-escalate tensions after protests by traders and shopkeepers over the collapsing rial spread across central Tehran on December 28, 29, coinciding with leadership turmoil at the Central Bank and mounting pressure over the draft 1405 (March 2026–March 2027) budget.

Speaking at a televised news conference in Tehran on December 30, Mohajerani said the Interior Ministry had been instructed to establish “dialogue mechanisms” with protesters and stressed the government viewed peaceful assembly as a right.

She added, “A 20-point programme [to change economic direction] covers four axes: improving livelihoods, controlling inflation, managing the market, and improving economic growth.”

Even “sharp voices”, she said, would be heard with patience, a tacit acknowledgement of the anger visible on the streets. “If people are speaking out, it means the pressure on them is heavy.”

She noted inflation remained “high” and said the government did not defend the status quo. While the state spends “billions of dollars” on subsidies, she admitted much of the support fails to reach households effectively.

Tehran is now seeking parliamentary approval to shift subsidies from the start of supply chains to the consumer end, with a mix of food baskets and credits to be finalised this week. No figures were disclosed.

On inflation control, Mohajerani blamed chronic budget deficits and banking imbalances, pledging tighter spending discipline to year-end and more orderly allocations next year.

She also said curbing excessive bank borrowing from the Central Bank was a priority, signalling resistance to further bond issuance that could rattle capital markets.

Earlier in the day, authorities announced a wide shutdown of Tehran and other provinces on Wednesday, December 31, citing extreme cold and energy management.

All government offices, schools, universities, banks and commercial centres will close, except for emergency services, with university exams proceeding.

Officials urged residents to cut consumption to avoid power cuts and gas shortages.

Similar remote-working or virtual measures were rolled out in several other provinces as temperatures plunged below freezing, a move that some Iranians privately linked to security concerns following protests, though officials framed it strictly as an energy decision.

The political system also moved to close ranks. In a letter sent earlier on December 30, Pezeshkian told parliament speaker Mohammad Bagher Ghalibaf he agreed to five “livelihood and economic” amendments to the 1405 budget, including higher pay for public employees and pensioners, adjustments to income-tax thresholds favouring lower earners.