In the year since President Hosni Mubarak was ousted, Egypt has faced many challenges: the military-led government’s brutality against protesters and pro-democracy groups, its resistance to handing power to civilian leaders and the rise of Islamists in the country’s first free elections. Now worsening economic conditions are further sabotaging hopes for a democratic future.

The country’s foreign currency reserves have fallen from a peak of $36 billion to about $10 billion and could run out entirely by March. The currency is under severe pressure, and a steep drop in the exchange rate could bring painful inflation and more social unrest. Youth unemployment is about 25 percent, a dangerous situation where 60 percent of the citizens are 30 and under.

Egyptians want jobs, education and a say in governance. Many are justifiably angry about the military’s autocratic control — and will be angrier still if economic conditions deteriorate further. They aren’t the only ones with a stake in the outcome. Egypt is the fourth-largest economy in the Middle East. Its success, or failure, will have a huge impact on the region and beyond.

Egypt’s military rulers are now realizing how big a threat the collapsing economy is — and they clearly don’t want to be blamed. In May, they rejected a $3.2 billion loan from the International Monetary Fund, saying it would infringe on Egypt’s sovereignty. They wanted the money, but with no strings attached — no mandatory reforms or austerity measures, like cutting food and fuel subsidies. Now desperate, they resurrected the loan request this week and welcomed an I.M.F. delegation to discuss possible components of an economic program. The I.M.F. probably won’t make a decision on that request until March.