The government of South Sudan has warned that the imposition of any US-backed sanctions would be counter-productive and harm the peace process.
Foreign Minister Barnaba Marial Benjamin said that sanctions would be a burden on the people.
The US has warned that an arms embargo and other punitive measures are possible if the two sides in South Sudan’s conflict cannot agree a deal.
Talks between the government and rebels are taking place in Ethiopia.
They have until Thursday to make an agreement.
Asset freeze
Limited sanctions on South Sudan were imposed by the UN Security Council on Tuesday.
“Those who frustrate peace must begin to pay the price,” US Ambassador Samantha Power said.
But Mr Benjamin said sanctions would “not only hinder the peace process but will inherently be felt by our countrymen and women down to the very basic level”.
“We need to remove obstacles obstructing peace not create new ones,” he said in a statement.
A resolution unanimously agreed by the Security Council does not specifically name South Sudan President Salva Kiir or rebel leader Riek Machar as possible targets for the sanctions.
But correspondents say it is likely they would be included in an asset freeze and travel ban.
The UN Security Council voted to impose limited sanctions on South Sudan on Tuesday
The conflict – which erupted in December 2013 – has killed thousands and displaced about 1.5 million people.
Earlier ceasefire deals have not lasted because of fighting that many argue has had ethnic overtones.
South Sudanese rebels have warned that the peace talks could collapse if the government refuses to give more ground, especially over the vexed question of power sharing in a unity government.
The war began when President Kiir accused Mr Machar – his former deputy – of planning a coup.
Mr Machar denied the coup allegation, but then raised a rebel force to fight government troops.
The fighting has mainly been between President Kiir’s Dinka ethnic group and the Nuer group, which Mr Machar belongs to.
Mr Kiir has led South Sudan, the world’s newest state, since its independence from Sudan in 2011.
