Insufficient credit for Brazilian private companies will prevent the country's development bank BNDES from moderating loan disbursements this year as quickly as it would like, the bank's chief Luciano Coutinho told Reuters.

The BNDES, which is the main source of long-term lending to Brazilian companies, has pledged to moderate the amount of subsidized loans it gives companies, hoping that private banks would increase their participation in the credit market.

However, Coutinho said that overly cautious private-sector lenders have added pressure on the BNDES to keep providing credit to Brazilian companies, which he says are struggling to even get working capital.

"What is frustrating for us is that we expected to moderate credit (disbursements) more intensively with a stronger participation from the private sector, but that didn't happen," Coutinho said in an interview late on Monday at the sidelines of the BRICS leaders summit in the coastal city of Fortaleza.

"This is a problem. Credit (lenders) to the private sector have been more cautious than we expected," said Coutinho, adding that he is confident that the bank will still be able to pull back somewhat from the market this year.

The Cornell-trained economist said a recent increase in the central bank's benchmark interest rate and a more cautious financial sector have added to Brazil's financing gap.

Brazilian banks extended credit at the lowest annual pace in over seven years in May as a slowing economy, record consumer debt levels and quickening inflation have hurt Brazilians' purchasing power.

Meanwhile, loan disbursements by the BNDES in the first four months of the year are up 8 percent to 58.8 billion reais ($26.6 billion) from the same period a year ago, according to bank data.

"Our objective is to slow the pace of credit disbursements, but there is mounting pressure on us to act because of the slowdown in private credit," Coutinho said. "This puts us in a challenging situation."

The role of the BNDES greatly expanded during the 2007-2009 global financial crisis, when Brazil ordered its state-run banks to provide credit to companies, helping the economy avoid a deeper, longer recession.

The aggressive pace of disbursements continued even after the worst of the crisis was over with the government issuing dozens of billions of dollars in local bonds to capitalize the BNDES -- one of the world's largest development banks.

Still, the flow of cheaper loans has failed to jumpstart the Brazilian economy, which is expected to post a fourth straight year of subpar growth in 2014.

The hefty capitalizations of the BNDES have contributed to expand the country's gross debt over the past few years and raised alarm bells among ratings agencies, which warn those operations could end up hurting the country's credit rating.

The government of President Dilma Rousseff has already started to reduce the amount of transfers to the BNDES, promising a capitalization of 30 billion reais this year, down from 39 billion reais last year.

State-run banks Caixa Econômica Federal and Banco do Brasil (BBAS3.SA) have also started to slow the pace of financing to companies.