Fiscal rules are a promising tool to improve fiscal discipline and reduce waste in public spending, but their effectiveness and political feasibility remain unclear, particularly in weakly institutionalized settings. We leverage exogenous variation across Colombian municipalities in exposure to a fiscal rule that limits the operating expenditures of local governments. Our difference-in-differences analysis yields three main findings. First, the fiscal rule is highly ef-fective at reducing operating expenditures and the probability of a current deficit.