Of course it absolutely possible, the first thing need to do is the country doesn't ban bicoin, furthermore if the government can easily work together with bitcoiners. Well, thats just my perception and I hope it'will happens in my country. Actually we can do better if this happens.
In my opinion, it cannot really affect the whole country and its economy if they will legalize and accept bitcoin as a legal currency because fiat will be still the centered of transaction for the transferring and also payment of different exchange like import and export so bitcoin will be just an option for the government to work with and use it as a mode of payment.