"Our position remains unchanged. We are ready to help most affected countries with loans," Austrian Chancellor Sebastian Kurz tweeted on Monday evening.
A statement from his office said Austria would "continue to show solidarity" with hard-hit countries but rejected the idea of "grants".
French President Emmanuel Macron and German Chancellor Angela Merkel had earlier announced the unprecedented proposal after talks by video conference.
Macron stressed that the funds raised by the scheme "were not loans" and that it would be financed by borrowing from the market "in the name of the EU".
In his tweet Kurz said he had had "a good exchange with the Prime Ministers of Denmark, Netherlands & Sweden on the expected proposal by the EU Commission on the recovery fund".
The countries Kurz mentioned, along with Austria, have resisted the idea of using common debt instruments to raise rescue funds.
"We expect the updated MFF (multi-annual financial framework) to reflect the new priorities rather than raising the ceiling," Kurz said, referring to the European Union's long-term budget.
Germany had previously also been wary of the idea of shared borrowing but Monday's announcement marks a shift in its position.