"Complete cessation of hostilities in South Sudan is expected as of this morning (Monday)," Seyoum Mesfin, a negotiator from the regional IGAD bloc, told reporters in the Ethiopian capital Addis Ababa where the ceasefire deal was signed yesterday.
The two leaders have signed -- and then broken -- at least six previous ceasefire agreements since fighting began in December 2013.
The eight-member East African bloc IGAD, which has in the past threatened sanctions over violations but never taken action, says this time it will take any ceasefire violations to the UN Security Council and the African Union's Peace and Security Council and ask for "tough measures" against them, Mesfin said.
"This is a partial agreement because we have not solved some of the most critical issues," Machar said after the signing, citing disagreements on the "transitional government structure" to set up and divide responsibilities within the administration.
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Negotiations will resume on February 20 with IGAD giving the warring sides one last chance to reach a final agreement by March 5.
IGAD mediators did not try to hide their frustrations after meeting for an eighth summit to try to resolve the crisis.
South Sudan gained independence from Sudan in 2011 after decades of armed conflict.
Ethiopian Prime Minister Hailemariam Desalegn warned that failure to reach an agreement would have serious consequences for all of them, especially the leaders of South Sudan.
A Western diplomat involved in the talks played down yesterday's interim agreement, saying: "This is not a significant breakthrough, this is a small step at the most."
Fighting broke out in South Sudan, the world's youngest nation, in December 2013 when Kiir accused his sacked deputy Machar of attempting a coup.