If you are that close, then telling her shouldn't be embarrassing. I also think that if you are close, she would know your situation. I think she is the one who should be embarrassed! However, our friendships can be a bit complicated, and I guess the fact that you are asking means that there is a bit more to this.
I might find an excuse - if you are that far away she's unlikely to find you out! Or something nearer the truth "I would have loved to come, but I have a big expense coming up, and really can't justify spending this much on one event", however lovely".
You might send a nice pressie. Or suggest another meet-up, in a more convenient and affordable location, just for the 2 of you, instead.
I hope you won't take offense on behalf of your friend if I say that I find these sorts of 'parties' (which I only know about by reputtion) rather rude. Unless the person inviting is part of a very small group, whose finances she is well aware of, I don't think she should do this.
I have never been put in this position, and would honestly think less of any 'friend' who did that to me.
If unhelpful, please ignore!