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Citigroup analysts consider the elections on 20 September in Greece as very important. For this reason, a few days before the elections they presented an analysis entitled "Greece: Why the September 20 Elections Matter".

According to the analysis, the election result is uncertain, as experts believe that most probably SYRIZA would be the first political party. Nevertheless, it would have no absolute majority and one to three smaller parties would form the government.

The analysis of Citigroup assumes that Greece’s future government (whatever it is) would find it difficult to implement the ambitious conditions of the third rescue plan and to achieve the fiscal targets.

Possible scenarios

According to the baseline scenario of Citigroup, SYRIZA would rank first, having a narrow margin with New Democracy. As a result, a coalition government would be composed, which would include SYRIZA in cooperation with PASOK or Potami, or three parties in the event that Independent Greeks would manage to cross the 3% threshold and enter parliament. One such scenario would probably be the ‘lightest’ in terms of investments. Citigroup assesses as low the probability of such a coalition being able to serve out its full term.

Most probably, even in opposition, the political line followed by New Democracy would provide broader support for the implementation of the rescue programme than if SYRIZA would be in opposition.

According to the alternative scenario, New Democracy would win the elections and it would form a government in cooperation with PASOK and Potami, a kind of agreement on the part of SYRIZA being possible as well. According to Citigroup, however, the implementation of this scenario contains more risks. The risk of failing to entirely complete the first monitoring of the programme would be higher than of delaying it, possibly until early 2016, which would adversely affect the timing of the debate on debt.

Stability and keeping the place in the euro zone

In the medium term, Citigroup continues to doubt that the economic and political conditions after the elections would contribute towards stability and keeping Greece's place in the euro zone. According to the analysis, the future Greek government would be unstable in this regard.

As to what would make a Grexit less probable, the ideal option would be to establish a broad government of national consent to fully implement the reform programme, combined with increased support from creditors for substantial debt restructuring.

How the economy would develop

Citigroup analysis recognizes that the Greek economy has gone beyond the targets set in a more positive climate. Experts, however, continue to believe that the worsening of economic conditions would probably result in a further deterioration of the state budget balance, and particularly in lower tax revenues.

Capital controls and political uncertainty would lead to economic recession in the second half of the year, in the range of 3% - 4% in the third quarter at that, compared to this year’s second quarter.