RIYADH - A new legal framework for Saudi Arabia's government to do business with the private sector will be in place by year-end while other parts of an economic stimulus package are ready, Commerce and Investment Minister Majid al-Qusaibi said.

More than a year after Riyadh launched ambitious economic reforms, it has made little progress in boosting private business activity or creating jobs. The private sector is meanwhile struggling under austerity measures needed to cut a state budget deficit caused by low oil prices.

Qusaibi told reporters at a business conference late on Sunday that the government was already allocating and directing some money to the private sector, without giving figures.

Officials hope the private sector will invest alongside the government in many projects through public-private partnerships, but rules for many of the projects are not yet clear.

"It has supported the Industrial Development Fund -- it increased its capital along with the other funds. There is also support for the minerals strategy in the country," he said when asked about the stimulus package.

"So there is truly motion in all directions."

Vice Minister for Economy and Planning Mohammed al-Tuwaijri told Reuters earlier this year that an "industrial sector stimulus package" would be launched in the fourth quarter to encourage investment, focusing on areas where Saudi Arabia has a competitive advantage, such as mining.

Qusaibi also said Riyadh's effort this year to improve diplomatic relations with Baghdad had been partly aimed at opening the Iraqi market to Saudi products.

He and three other ministers were attending a four-day forum to encourage the development of smaller companies in Saudi Arabia. In a cavernous Riyadh exhibition centre, government agencies and bankers showcased their services to an audience of youthful entrepreneurs and would-be business owners.

The ministers, who appeared on stage but took no questions from the audience, praised an online platform called Miras, which the government launched earlier this year as a one-stop-shop for investors seeking to do business in Saudi Arabia.

(Reporting by Stephen Kalin; Editing by Andrew Torchia and Catherine Evans) ((stephen.kalin@tr.com; +971 52 322 9759; Reuters Messaging: stephen.kalin.thomsonreuters.com@reuters.net))