A man wears a “Yes” cap in Panama City. (AP)

Panama City, Oct. 23 (Reuters): Panamanians overwhelmingly backed a plan yesterday to give their famous 92-year-old canal its biggest-ever overhaul, an ambitious project the government hopes will help lift the country out of poverty.

The $5.25 billion face-lift allowing the inter-oceanic canal to handle mammoth modern cargo ships won four-to-one voter support in a referendum, the central American nation’s Electoral Tribunal said.

The project for the canal, which was US territory until it was returned to Panama in 1999, will double its capacity to enable more and bigger ships to cross between the Atlantic and Pacific oceans, boosting government revenue.

Fireworks cracked over the night sky in a victory celebration and revellers drove around the capital honking their horns and waving red, white and blue Panamanian flags.

“Never in the history of the country have we Panamanians taken a decision of this magnitude,” President Martin Torrijos said. “We have set the bases to build a better country.”

“Behind us is the time we lost... Ahead is the time to overcome the shame of having a country in which 40 per cent of our people live in poverty,” he said in a television address.

Expansion of the canal, an engineering wonder first opened in 1914, will create a jobs bonanza for Panama’s 3 million people and boost economic growth, supporters say.