Martin Torrijos, the son of a Panamanian military leader, took office as the country's president Wednesday, promising jobs, better relations with Cuba and a referendum on a proposed $8 billion expansion of the Panama Canal.

Torrijos said Panamanians should vote to decide the issue of widening the canal for a new generation of bigger ships because of the project's high cost for this poor nation, where 40 percent of the people live in poverty.

He also promised an investor-friendly government that also has concern for the poor. "Doing business in Panama has become a headache," he said.

Torrijos had tough words for his predecessor, Mireya Moscoso, calling her term "five years of wasted opportunities."

"We receive a country full of youth without hopes," he added.

He also criticized Moscoso for last week's pardon of four Cuban exiles who had been accused by the Cuban government of trying to kill President Fidel Castro at a summit in Panama in 2000. "For me, there are not two classes of terrorism, one that is condemned and another that is pardoned. . . . It has to be fought no matter what its origins," Torrijos said.

The new president, who holds an economics degree from Texas A&M, promised an austere, honest government and said public finances were "in a deplorable state whose magnitude we have not yet begun to discover." He cautioned, however, that "we are not going to satisfy all of the expectations of the people immediately."

The inauguration was attended by officials from around the world, including Secretary of State Colin L. Powell.

Torrijos's father, Gen. Omar Torrijos, signed a deal with President Jimmy Carter in 1977 that led to the handover of the canal from U.S. to Panamanian authority. "He showed us that it was possible to achieve independence with dignity and bravery," the new president said of his father, who died in a plane crash in 1981.