Bulgaria's recent economic success will be wasted unless the country takes measures to boost productivity to compensate for the rapid aging of its population, the World Bank said on Tuesday.

By 2025, more than one in five Bulgarians will be over 65, which leaves the country little time to reform its pension and healthcare systems.

Bulgaria is not alone in this predicament, with 28 countries in eastern Europe and the former Soviet Union facing the same challenge.

The group of countries is the only region in the world facing the combined challenges of rapid aging, relatively poor populations and an incomplete transition to mature market economies, according to a report by the World Bank.

"It is this interaction of the three transitions - demographic, economic, and political - that makes the region, and its challenges, unique," said Arup Banerji, human development economist at the World Bank and co-author of the report.

The paper, titled "From Red to Gray: The "Third Transition" of Aging Populations in Eastern Europe and the Former Soviet Union", was released on Wednesday.

As the average age of the population rises, public expenditure on pensions and healthcare is set to grow accordingly, while the labor force will shrink.

To compensate, the countries in the region need to reform their financial markets, encourage saving and increase labor market flexibility.

Strong productivity will be absolutely essential if the Eastern European and former Soviet countries are to continue growing rapidly and converge to EU incomes and living standards, the report concludes.

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