ABU DHABI- Oman's State General Reserve Fund (SGRF) has got government approval to launch a $1 billion infrastructure fund that will invest in the tiny Gulf state's infrastructure projects, a senior finance ministry official said on Thursday.

The non-OPEC oil producer, like some other Gulf states has been hit hard by low oil prices in the last two years leading to budget deficits.

Oman is also channeling funding into projects that are essential for the country's non-oil future.

"They (SGRF) have got the legal settings and approvals," he told Reuters, declining to be named as it is not publicly announced.

The new fund will be targeting investors in the Gulf as well as funds from outside the gulf, he said, adding that details will be announced by the SGRF.

SGRF could not be immediately reached for a comment.

The official also said Oman has no plans to introduce any fresh taxes this year and is ready to introduce the Value Added Tax (VAT) from 2019.

Oman is one of the financially weakest states in the Gulf and last month Fitch cut its rating of Oman's debt to just above junk territory; Standard & Poor's already rates Omani debt as junk.

(Reporting By Stanley Carvalho, editing by Saeed Azhar) ((stanley.carvalho@thomsonreuters.com; + 9712 6444431; Reuters Messaging: stanley.carvalho.thomsonreuters.com@reuters.net))