The World Bank projects two contrasting scenarios for Pakistan in its landmark report, Pakistan@100: Shaping the Future. Pakistan could be a $2 trillion economy by 2047, if it achieves high economic growth rates for the next three decades. If the system fails to reform itself, Pakistan may further slip into the abyss of poverty.

According to the report, Pakistan could become a $2 trillion economy in the next 28 years if it remains steadfast in its reforms and manages to reduce its population growth rate to 1.2pc. The $2 trillion economy means an upper middle-income country where per capita income will be $5,702 but it would have to halve its population growth rate to 1.2pc by 2047. However, business, as usual, would mean that the size of Pakistan’s economy will be only $1 trillion and the per capita income would be just $2,110. By 2047, Pakistan’s population will be 376 million at the current growth rate. The size of Pakistan’s economy is now only $275 billion.

The World Bank says the State Bank of Pakistan (SBP) has been undermined by rent-seeking behaviour and complex security situation. Pakistan’s economy right now is captured by four influential groups that have frustrated efforts to bring reforms but the country now stands at a crossroad and it has to decide whether it wants to become an upper middle-income nation or stay poor. Advancing its argument, the report said the chief economist of the Planning Commission, Mahbub-ul-Haq, had claimed in the 1960s that 22 families controlled 66pc of the industrial wealth and 87pc of banking and insurance. “More recent analysis suggests that elite capture continues to constrain economic policymaking. Since the 1980s, the share of industrialists in the National Assembly and parliament has doubled, blurring the barrier between politicians and businessmen,” the report noted.

“Elite capture in Pakistan has affected policymaking, as in certain circumstances political leaders lack incentives to formulate policies in response to citizens’ demands, or to work toward effective policy implementation,” the report said, adding that a unique feature of Pakistan’s history is that economic, social and security policies gave rise to various elite factions that sustain economic and political power until today. It identifies at least four influential groups that gained power through historic events and continue to leverage their influence on the political system for personal gain. There was evidence that Pakistan’s elites have used this power in the past to undermine reforms that would have reduced their influence. For instance, landowners and industrialists have leveraged their political representation to oppose reforms that would have enhanced tax-revenue collection from agriculture and the private sector, it noted.

Commenting on the report, Finance Minister Asad Umar said an open and rule-based economy could break the stranglehold of the elite on the economy as the WB study put the annual cost of elite capture at a staggering Rs860 billion. Experts say if the Pakistan Tehreek-e-Insaf (PTI) government manages to break the iron grip of the elite, the benefit in terms of additional revenues will end the need to levy more taxes under a possible International Monetary Fund (IMF) programme.

Experts say the cost of elite capture is nearly 2.5pc of the gross domestic product (GDP). According to former Finance Minister Dr Hafiz Pasha, the cost had been worked out on the basis of tax expenditure that the elite influential groups had enjoyed. He pointed out that income tax exemption for trusts and agriculture was among few examples. The imposition of 25pc regulatory duty on the import of sugar is yet another example of elite capture. The state’s capture through the culture of Statutory Regulatory Orders has to end, he suggests.

According to Illango Patchamuthu, World Bank Country Director for Pakistan, the country has some important decisions to make if it wants to give its children the future they deserve. If the country can make the right decisions now, it can accelerate and sustain growth to become a confident upper middle-income by the time it turns 100. It is ambitious, but possible. Other countries — South Korea, China, and Malaysia — have transformed their economies within a generation, and there is no reason why Pakistan cannot achieve the same. The alternative is not inspiring. If the country fails to accelerate and sustain growth as well as control population growth, by 2047 income levels will be close to where they are today and with challenges similar to what they are today. “I like to imagine another Pakistan, in which stunting and malnutrition are gone, in which family background does not determine what job you can get, women compete equally with men, businesses thrive, and Pakistan competes with the likes of Shanghai or Singapore as a trading hub. Now is the time to come together and see what needs to be done to achieve this goal. A growth narrative for Pakistan needs to rest on these four elements: investing in people; using resources more efficiently; caring for the environment; and finally, improving how Pakistan is run to support growth and the implementation of difficult reforms,” he wrote in a newspaper article.

The World Bank has not only identified the weaknesses of Pakistan’s financial system but also presented their solutions. Pakistan can boost its growth by investing in people, improving productivity, reforming institutions and protecting the natural environment, it points out. It argues that instability in the political system has reduced accountability and skewed leaders’ incentives away from long-term reforms. The characteristics of Pakistan’s political system have weakened the link between citizens and political leaders that is crucial to sustaining the triangular relationship.

The ruling party has come to power in the name of change. It wants to create a new Pakistan, which has equal opportunities for all and no one is above the law. The performance of the government has not been satisfactory so far. It is repeating the mistakes of past governments. It will have to change its mindset to transform Pakistan.