Because maybe when the government looks at bitcoins, they are incapable of tracing any person or company holding responsibility for Bitcoin not only in their jurisdiction, but in the entire world. More  reason why government announce Bitcoin is illegal that Bitcoin is a private currency that government can not regulate, track or control which will have effect on economy of the country.

Moreover because the government might be afraid that the currency in that country will no longer apply to society and will be replaced by something new, that is Bitcoin. If that happens then the currency in that country can be worthless and unused.