The article deals with the sources, specific features and mechanisms of state capitalism in the Republic of Belarus. The analysis is based on the elements of the theories of economic transition, as well as those of public finance and administration. The author explains the factors that pushed independent Belarus to prefer the model of state capitalism. These include: Soviet Union heritage of planned economy and centralized public administration (that helped the Republic to successfully revive from the devastative consequences of fascist Germany’s occupation in 1941–1944), decisive role of big and rather modern industrial and agricultural enterprises in the national economy, public demand for building up a welfare state, well-established traditions of extensive financial support to the enterprises. State capitalism in Belarus identifies through budget consolidation, level of taxation and state-owned enterprises. The key instruments of this economic model are state-owned and private enterprises, commercial banks, Development Bank, Sovereign Wealth Fund. The author’s conclusion is, however, that relative efficiency of the Belarus’ model of state capitalism should not be overestimated. It works only with continuation of extensive public and financial support. Still, the main sources of the state capital are the market instruments. Thus, the existing model can be successful only in the short-term period. It mobilizes economy but limits its flexibility, So far, there is a high probability that Belarus faces a great risk to fall into a long-term institutional trap of conservation of its economic structure and steadily falling international competitiveness.