In a report recently submitted to the Security Council, Guterres proposed "three key benchmarks" out of 34 specific targets to assess the embargo, which is up for renewal at the end of May.
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"These benchmarks may contribute to the implementation of the agreement [between South Sudan rivals], the cessation of hostilities and the permanent ceasefire," Guterres said.
The criteria he listed were progress "on political and governance issues," on "disarmament, demobilization and reintegration" of fighters and on "the humanitarian and human rights situation."
Impoverished South Sudan has been devastated by violence since its independence in 2011 with more than 380,000 people killed.
The crisis eased in February 2020 when President Salva Kiir reached a power-sharing deal with his rival Riek Machar but observers have warned of a return to war as there has been limited movement on other aspects of the truce.
A report by UN experts in December called for an extension of the embargo and reported several violations, notably by Ugandan troops.
Amnesty International also backed the preservation of the embargo, saying there was a surge in violence against civilians last year.
The United Nations Mission in South Sudan said this week it nonetheless planned a small reduction in troops as violence has abated.
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