"We cannot finance any military action where we are not involved in the decision-making process," Merkel told other leaders at the EU-summit in Brussels.
She did admit that there were "good reasons for why taking action in Central Africa was necessary," Spiegel Online news site reported.
The comments came as EU leaders discussed the common defence and security policy, over which the 28 states are deeply divided.
France wanted a European war fund to be created to help finance its military operations in Central Africa. Germany, along with other states, are against the plans.
It said it saw "no fundamental need for revision" of the agreements already in place when it came to funding military action, according to government sources.
The issue has flared up between European leaders because of France's decision earlier this month to deploy troops to the Central African Republic in a bid to prevent the bloodshed which has continued as a result of fighting between Christian militants and Islamist fighters.
It is France's second major intervention in Africa within a year, the first taking place in Mali, where French President Francois Hollande sent thousands of troops in January.
Hollande said he had received "lots of support from the European governments", but added: "So now the financial contributions must follow this support."