The North angrily denied the claims and Hyon later appeared on state television. North Korea has made a decision to participate.
Analysts point out that satellite pictures of the airfield preparations appear to show far less activity than ahead of previous major displays.
Guterres welcomed the increasingly tough sanctions resolutions adopted by the U.N. Security Council in response to North Korea's increasingly sophisticated nuclear and ballistic missile tests and urged all countries to fully implement them.
"It would look freakish to have a military parade in Pyongyang, just a day before the opening of what the South has declared a "Peace Olympics", Ahn Chan-Il, an analyst at the World Institute for North Korea Studies, told AFP.
Korea watchers say Pyongyang is unlikely to acknowledge any link between the military parade and the Olympics, but while this year is a major anniversary, there has not been a major celebration of February 8 in many years. But April 25 has been the bigger date since the seventies, and has been designated Army Foundation Day.
But the North's parades involve tens of thousands of people and take months to prepare, while Pyongyang is bitterly cold in February. The ministry also outlined plans to encourage dialogue between the US and North Korea, to create a positive cycle of talks.
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The Unification Ministry pledged to use the momentum from the Games to try and improve relations with North Korea.
The news received mixed reaction from members of the Korean community in Killeen, many of whom came from South Korea years ago.
"The ministers agreed that sanctions and pressure will continue on North Korea as it keeps developing nuclear weapons and missiles", she said.
"We are closely working with the United States and the United Nations Security Council Sanctions Committee on North Korea so that there should be no controversy regarding the North's PyeongChang Olympic participation running counter to global sanctions", Foreign Minister Kang Kyung-wha said during her interview with Yonhap News TV.
The US deployed six nuclear-capable B-52 Stratofortress bombers to the Pacific this week, while at a summit in Vancouver Tuesday, where the top diplomats from the United States, Japan, Canada and the United Kingdom were in town to discuss North Korea, Japanese Foreign Minister Taro Kono warned now was "not the time to ease pressure towards North Korea". It's very important that we have these Olympic games.