Saudi Arabia will not impose a tax on the money which foreign workers in the kingdom send back to their home countries, finance minister Ibrahim Alassaf told reporters on Tuesday.

Some countries in the Gulf have been considering such a step to raise money and curb outflows of funds as low oil prices strain their finances.

But Alassaf said the Saudi government's economic reform plan, announced on Monday, had approved two taxes: a value-added sales tax, which is expected to be introduced in 2018, and a tax on harmful substances such as tobacco or sugary drinks.

The VAT rate has been approved at 5 per cent but a study has been undertaken on possibly raising that rate gradually, he said.

On the new development projects, Alassaf said the government will partly fund projects in its economic reform plan by shrinking other projects and increasing the efficiency of its operations.

On Monday, the government published a broad economic reform plan which included state spending of around SR50 to SR60 billion ($13.3 billion to $16.0 billion) annually through 2020 on housing, transport, tourism, mining and many other projects.

Asked how the government could finance these projects while shrinking a large deficit to meet its target of balancing the budget by 2020, Alassaf said projects under the plan would take priority over other spending.

"Part of it will be made available from cancelled projects or projects that were downsized, and part of it will be made available from revenues that will rise - oil and non-oil revenues."

He added that efficiency gains would also help to fund the reform plan.

Meanwhile, the labour minister has stated that Saudi Arabia had no "strategic target" to reduce the number of foreign workers in the kingdom as a way to cut unemployment among its citizens.

Asked at a press conference whether he expected the number of foreign workers to fall from a current level of about nine million, Mufrej Al Haqbani said: "There is no strategic target to reduce the number of working expatriates, and we don't want to link reducing unemployment with expatriates."

"The presence of expatriates is very important for the economy," he added.-Reuters