KARACHI - An FPCCI delegation lead its President Sultan Ahmed Chawla participated in the 4th meeting of Private Sector Advisory Council (PSCAC) held at SBP. Sultan Ahmad Chawla mentioned that record public borrowings in the history of Pakistan which is about five times of the previous year borrowing, led the liquidity crunch in financial market and higher cost of borrowing. Public borrowing through banking system and stagnancy at private sector borrowing show the direction of the monetary policy and priorities. He mentioned that reduction in size of working capital financing and private sector credit leads to higher cost of borrowing which ultimately lead the inflation. Sultan Ahmed Chawla has explained that higher public borrowing and lower private sector credit lead the higher cost of borrowing; while higher inflation and unemployment are the ultimate consequences of higher cost of borrowing. He elaborated the inverse relation between the higher cost of borrowing and competitiveness. The in-competitiveness leads the outflow of capital, lowering investment and unemployment on one side and the shortage of commodities and inflation on other hand. The poverty is the ultimate consequence of unemployment and inflation. Sultan Ahmed Chawla pointed out that the SBP monetary policy measures have been generating inflation. The State Bank of Pakistan has been using tight monetary policy by increasing basic discount rate. The SBP has been justifying the tight monetary policy to control over inflation since last two years but inflation has been rising continuously. It is noted that the rate of inflation was 7.8 percent when discount rate was at 9.5 percent since then inflation is continuously increasing due to continuous rise in discount rate. The rate of inflation has reached at 24.65 percent with the highest increase in discount rate at 15%. He emphasized on the adjustment on macroeconomic policy variables including facilitation for agricultural sector development lowering cost of borrowing and control over inflation by adopting supply side improvement policies to improve industrial competitiveness and reduce the inflation. The President FPCCI has also said that the high cost of production is hampering the industrial competitiveness. Textile and sugar industries of Pakistan are the most affected sectors. Dr Ikhtiar Baig expressed industry's gratitude to SBP for providing one-year moratorium on loan repayments under long term financing facility for export-oriented projects (LTF-EOP). He said that SBP's incentive would help the textile industry, which has been under pressure due to high cost of production. Dr Mirza Ikhtiar Baig further suggested that LC margin should be removed from all essential raw materials except on luxury items Salim Raza, Governor State Bank of Pakistan (SBP) has assured the consideration of FPCCI recommendations for the improvement of monetary policy.