President William Ruto has suspended the state purchase of new motor vehicles for one year.
While addressing the nation on Friday, the President said security agencies are exempted from the directive.
Ruto said a new policy on transport for public officers will be developed during the period.
"The purchase of new motor vehicles by the government is suspended for 12 months, except for security agencies. A new policy on transport for public officers will be developed within this period," Ruto said.
The President further suspended all non-essential travel by state and public officers.
He said the move is to help improve the quality, efficiency, and transparency in serving Kenyans.
He further said it will help ensure that Kenyans receive maximum value for their resources from a public sector that prioritizes their welfare.
"I believe these changes will set our country on a trajectory towards economic take-off, enabling us to achieve the strategic objectives of the bottom-up economic transformation agenda and deliver our commitments to radically enhance opportunities for Kenyans and transform our country," he said.
During the Friday address, the President announced a raft of measures in a bid to implement and enhance austerity measures.
He said the government seeks to align expenditures with the budgetary implications of the withdrawal of the Finance Bill, 2024.
The President said the government has struck a middle ground and proposed to the National Assembly a budget cut of Sh177 billion and borrow the difference.
"The additional borrowing will increase our fiscal deficit from 3.3 per cent to 4.6 per cent and will be used to protect funding of critical government," he said.
Ruto said the services include the hiring of Junior Secondary School teachers and medical interns, funding the milk stabilization program for dairy farmers, reviving the stalled roads program and retaining the fertilizer subsidy program.
Others are to settle the debts owed to farmers in the coffee subsector capitalise the Coffee Cherry Fund and enable public sector-owned sugar mills to pay outstanding debts to sugarcane farmers for their deliveries, additional funding for the higher education new funding model and settle arrears owed to counties.
"In keeping with the enhanced austerity measures we have committed to implement and align government expenditures with the budgetary implications of the withdrawal of the Finance Bill, 2024," he said.