Presidential contender Mehdi Karroubi accused Mahmoud Ahmadinejad of dishonesty on Saturday after the incumbent president painted a picture of the economy Karroubi said was unreal.
Hardliner Ahmadinejad, 52, seeking a second four-year term, said Iran's economy had actually grown under his administration, a claim contrary to reports by economists who have blamed him for an economic crisis.
In a debate aired on state television, he showed a series of colourful charts claiming Iran's gross domestic product rose to an annual average of "around 6.25 per cent from 5.61 per cent in the previous government."
He said inflation had "come down and was less than 15 per cent now," adding that pensions had jumped by "nearly 256 per cent".
According to central bank figures, Iran is currently reeling under inflation of around 25 per cent, which several economists attribute to Ahmadinejad's expansionst policies.
The unemployment rate is around 12.5 per cent.
"The salaries of people from the lowest strata of society rose under the present government," said Ahmadinejad who was neatly dressed in a blue shirt and dark striped suit.
He said even as unemployment rose across the world in countries such as Britain and Canada, "availability of jobs rose in Iran."
Karroubi, 72, is dubbed the 'sheikh of reforms' in Iran. He tried to pin Ahmadinejad down in the occasionally fiery debate, saying the "government must be honest to the people."
Dismissing the figures given by Ahmadinejad, the cleric said: "I have been working in the parliament for 16 years ... all the figures that you have given are contradictory to the ones we have seen over the years."
Karroubi also ran for president in 2005, but was defeated in the first round. He claimed that was due to "bizarre irregularities" in the voting process.