The Minister of State, Conor Lenihan, has appointed a consultant to set up Ireland's first development bank. The bank will provide finance for projects in the developing world that normally do not attract conventional bank finance.

Ireland has the "money and skills" to set up a world-class development bank," Mr Lenihan tells the Investor magazine in a new interview.

Former president of the Irish Bankers Federation, Diarmuid Bradley, has been appointed as consultant to study the idea in more detail and to examine submissions made to Government on the issue.

Though the Government has not committed to an exact structure yet, Mr Lenihan pointed to Norway's development bank, Norfund, as a possible example for the Irish government to follow.

Irish overseas development aid has risen from €75 million in the 1990s to over €700 million in 2005, which is over 0.4 per cent of the Republic's GDP.

The Republic is set to reach the millennium goal of 0.7 per cent by 2012, Mr Lenihan explained.

The proposed bank will work with existing local structures and may focus on a specific region or sector.

The Republic now has the expertise and money to help other countries develop their financial structures, Mr Lenihan added.