Sending Money Home: The Economics Of Migrant Remittances - IELTS Reading Answers & Explanations
From Road to IELTS Academic Reading Test 6 · Part 1 · Questions 1–13
Reading Passage
You should spend about 20 minutes on Questions 1–13, which are based on Reading Passage 1 below.
Sending money home: the economics of migrant remittances
A Every year millions of migrants travel vast distances using borrowed money for their airfares and taking little or no cash with them. They seek a decent job to support themselves with money left over that they can send home to their families in developing countries. These remittances exceeded $400 billion last year. It is true that the actual rate per person is only about $200 per month but it all adds up to about triple the amount officially spent on development aid.
B In some of the poorer, unstable or conflict-torn countries, these sums of money are a lifeline – the only salvation for those left behind. The decision to send money home is often inspired by altruism – an unselfish desire to help others. Then again, the cash might simply be an exchange for earlier services rendered by the recipients or it could be intended for investment by the recipients. Often it will be repayment of a loan used to finance the migrant’s travel and resettlement.
C At the first sign of trouble, political or financial upheaval, these personal sources of support do not suddenly dry up like official investment monies. Actually, they increase in order to ease the hardship and suffering of the migrants’ families and, unlike development aid, which is channelled through government or other official agencies, remittances go straight to those in need. Thus, they serve an insurance role, responding in a countercyclical way to political and economic crises.
D This flow of migrant money has a huge economic and social impact on the receiving countries. It provides cash for food, housing and necessities. It funds education and healthcare and contributes towards the upkeep of the elderly. Extra money is sent for special events such as weddings, funerals or urgent medical procedures and other emergencies. Occasionally it becomes the capital for starting up a small enterprise.
E Unfortunately, recipients hardly ever receive the full value of the money sent back home because of exorbitant transfer fees. Many money transfer companies and banks operate on a fixed fee, which is unduly harsh for those sending small sums at a time. Others charge a percentage, which varies from around 8% to 20% or more dependent on the recipient country. There are some countries where there is a low fixed charge per transaction; however, these cheaper fees are not applied internationally because of widespread concern over money laundering. Whether this is a genuine fear or just an excuse is hard to say. If the recipients live in a small village somewhere, usually the only option is to obtain their money through the local post office. Regrettably, many governments allow post offices to have an exclusive affiliation with one particular money transfer operator so there is no alternative but to pay the extortionate charge.
F The sums of money being discussed here might seem negligible on an individual basis but they are substantial in totality. If the transfer cost could be reduced to no more than one per cent, that would release another $30 billion dollars annually – approximately the total aid budget of the USA, the largest donor worldwide – directly into the hands of the world’s poorest. If this is not practicable, governments could at least acknowledge that small remittances do not come from organised crime networks, and ease regulations accordingly. They should put an end to restrictive alliances between post offices and money transfer operators or at least open up the system to competition. Alternately, a non-government humanitarian organisation, which would have the expertise to navigate the elaborate red tape, could set up a non-profit remittance platform for migrants to send money home for little or no cost.
G Whilst contemplating the best system for transmission of migrant earnings to the home country, one should consider the fact that migrants often manage to save reasonable amounts of money in their adopted country. More often than not, that money is in the form of bank deposits earning a tiny percentage of interest, none at all or even a negative rate of interest.
H If a developing country or a large charitable society could sell bonds with a guaranteed return of three or four per cent on the premise that the invested money would be used to build infrastructure in that country, there would be a twofold benefit. Migrants would make a financial gain and see their savings put to work in the development of their country of origin. The ideal point of sale for these bonds would be the channel used for money transfers so that, when migrants show up to make their monthly remittance, they could buy bonds as well. Advancing the idea one step further, why not make this transmission hub the conduit for affluent migrants to donate to worthy causes in their homeland so they may share their prosperity with their compatriots on a larger scale?
Questions
Questions 1–7 Matching Headings
Reading Passage 1 has seven paragraphs, A–G.
Choose the correct heading for paragraphs B–H from the list of headings below.
i. Stability of remittances in difficult times
ii. Effect of cutback in transaction fees
iii. Targeted investments and contributions
iv. Remittances for business investment
v. How to lower transmission fees
vi. Motivations behind remittances
vii. Losses incurred during transmission
viii. Remittances worth more than official aid
ix. How recipients utilise remittances
x. Frequency and size of remittances
xi. Poor returns on migrant savings
Questions 8–13 Summary Completion
Complete the summary below.
Choose NO MORE THAN TWO WORDS from the passage for each answer.
Countries are unwilling to enforce lower transaction fees as they are worried about 8, and villagers lose out when post offices have a special relationship with one particular money transfer agency.
Each remittance might be small but the total cost of remittance fees is huge. Governments should 9 on small amounts and end the current post office system or make it more competitive. Another idea would be for a large non-profit association, capable of handling complicated 10 to take charge of migrant remittances.
Migrants who send money home are able to save money, too, but it receives little or no interest from 11. If a country or organisation sold bonds that earned a reasonable rate of interest for the investor, that money could fund the development of homeland 12. The bonds could be sold at the remittance centre, which could also take donations from 13 to fund charitable projects in their home country.
Answers & Explanations Summary
| # | Answer | Evidence | Explanation |
|---|---|---|---|
| Q1 | x | It is true that the actual rate per person is only about $200 per month but it all adds up to about triple the amount officially spent on development aid | Excerpt/Passage Explanation: The passage explains that while the amount of money sent by one person every month is small, the total amount of money from everyone is very large. Answer Explanation: The answer identifies that Paragraph A focuses on how often migrants send money (frequency) and the amount of money sent (size). Reason For Correctness: The correct answer is 'x' because Paragraph A provides specific data regarding the timing and volume of remittances. It mentions that these payments happen 'Every year' and at a rate of '$200 per month' (frequency). It also highlights the 'size' of these payments by stating they 'exceeded $400 billion' in total and are 'triple' the amount of official aid. These details directly support the heading regarding the frequency and size of the money being sent. |
| Q2 | vi | The decision to send money home is often inspired by altruism – an unselfish desire to help others. Then again, the cash might simply be an exchange for earlier services rendered by the recipients or it could be intended for investment by the recipients. Often it will be repayment of a loan used to finance the migrant’s travel and resettlement | Excerpt/Passage Explanation: The passage lists the different reasons why workers send money to their families: because they are kind and want to help, to pay back old favors, to save or grow money for the future, or to pay back money they borrowed for their trip. Answer Explanation: The answer means that the main topic of Paragraph B is the reasons why people choose to send money home. Reason For Correctness: The correct answer is 'vi' (Motivations behind remittances) because Paragraph B explains various reasons why migrants decide to send money to their home countries. It mentions the 'decision' is 'inspired by' feelings like altruism, which means wanting to help others. It also lists other goals, such as and paying for investment or the 'repayment' of travel costs. The word 'motivations' functions as a synonym for these reasons or intentions. |
| Q3 | i | At the first sign of trouble, political or financial upheaval, these personal sources of support do not suddenly dry up like official investment monies | Excerpt/Passage Explanation: The passage explains that when there is a big problem with the government or the economy, this personal financial help does not stop suddenly. Answer Explanation: The answer says that Paragraph C focuses on how the money migrants send home stays steady and even grows when their home countries face big problems. Reason For Correctness: The correct answer is 'i' (Stability of remittances in difficult times) because Paragraph C explains that when there is an 'upheaval'—which means a big trouble or a sudden change—the money sent home does not 'dry up,' or stop. Instead, the money 'increases' to help families who are suffering. The text highlights that this money acts like 'insurance' during 'crises,' showing that it is a stable and reliable source of help when things are difficult. |
| Q4 | ix | It provides cash for food, housing and necessities. It funds education and healthcare and contributes towards the upkeep of the elderly | Excerpt/Passage Explanation: The passage says that the money is used to pay for food, a place to live, and other things people need every day. It also mentions that the money pays for schools, doctors, and helping older family members. Answer Explanation: The answer 'ix' means Paragraph D explains the various ways that people who receive the money spend it. Reason For Correctness: The correct answer is chosen because Paragraph D lists several specific examples of how the money is 'utilised' (which is another word for 'used'). It explains that the money pays for basic needs like food and shelter, as well as school and medical costs. The heading 'How recipients utilise remittances' perfectly summarizes these details about how the money is spent by family members. |
| Q5 | vii | Unfortunately, recipients hardly ever receive the full value of the money sent back home because of exorbitant transfer fees | Excerpt/Passage Explanation: The passage explains that people who are supposed to get the money almost never get all of it because the fees to move the money are very high. Answer Explanation: The answer vii means that a significant amount of money is lost because of the high costs charged during the process of sending money from one country to another. Reason For Correctness: The correct answer is vii because Paragraph E focuses entirely on the costs that reduce the amount of money family members actually receive. It uses words like 'exorbitant transfer fees' and 'extortionate charge' to describe how expensive it is to send money. Because these fees can be as high as 20%, the recipients experience 'losses' where they do not get the 'full value' of what was sent. |
| Q6 | v | If this is not practicable, governments could at least acknowledge that small remittances do not come from organised crime networks, and ease regulations accordingly. They should put an end to restrictive alliances between post offices and money transfer operators or at least open up the system to competition. Alternately, a non-government humanitarian organisation, which would have the expertise to navigate the elaborate red tape, could set up a non-profit remittance platform for migrants to send money home for little or no cost | Excerpt/Passage Explanation: The passage lists several methods to solve the problem of high fees. It suggests that governments should simplify the rules, stop the post office from only working with one company, allow more competition, or let a helpful organization create a system that costs very little for people to use. Answer Explanation: The answer means that the sixth section of the text (Paragraph F) explains different ways to make it cheaper for people to send money to their home countries. Reason For Correctness: The correct answer is choice 'v' because Paragraph F focuses on solutions and methods to reduce high payment costs. It suggests several ways to do this, such as changing government rules (easing regulations), allowing more companies to compete for business instead of having exclusive deals, and having charity groups create a free or cheap system for sending money. All these are specific answers to the question of 'how' to reduce (lower) the fees people pay to send money (transmission fees). |
| Q7 | iii | If a developing country or a large charitable society could sell bonds with a guaranteed return of three or four per cent on the premise that the invested money would be used to build infrastructure in that country, there would be a twofold benefit Advancing the idea one step further, why not make this transmission hub the conduit for affluent migrants to donate to worthy causes in their homeland so they may share their prosperity with their compatriots on a larger scale |
Excerpt/Passage Explanation: The passage suggests that money can be used to help build a country's facilities while also letting the sender get a financial gain. It also suggests that people who have a lot of money can give it away to help others in their home countries. Answer Explanation: The answer means that Paragraph H is best described by the title 'Targeted investments and contributions,' which refers to putting money into specific projects or giving it to helpful causes. Reason For Correctness: The correct answer is 'iii' because the paragraph discusses two main ways to use migrant savings beyond sending cash. First, it mentions 'invested money' used for 'infrastructure' (like roads or buildings), which matches 'targeted investments.' Second, it suggests that migrants could 'donate' to 'worthy causes' in their home country, which matches 'contributions.' |
| Q8 | money laundering | however, these cheaper fees are not applied internationally because of widespread concern over money laundering | Excerpt/Passage Explanation: The passage explains that low fees for sending money are not used between different countries because people are afraid that criminals will use these transfers to hide illegal money. Answer Explanation: The answer refers to the illegal act of making money made from crimes look like it came from a legal source. Reason For Correctness: The correct answer is 'money laundering' because Paragraph E explains why lower transaction fees are not used worldwide. It states that there is a 'widespread concern' (meaning many people are worried) about this illegal activity happening if fees are too low or regulations are too loose. The question asks what countries are worried about, and the passage specifically names 'money laundering' as the cause of this worry. |
| Q9 | ease regulations | If this is not practicable, governments could at least acknowledge that small remittances do not come from organised crime networks, and ease regulations accordingly | Excerpt/Passage Explanation: The passage says that if other solutions don't work, governments should at least recognize that small money transfers are safe and should make the rules for them less strict. Answer Explanation: The answer means to make official rules or laws less strict and easier for people to follow. Reason For Correctness: The correct answer is "ease regulations" because the passage suggests that governments can help migrants by changing how small money transfers are handled. Paragraph F points out that since small payments are not typically part of organized crime, governments should make the laws (regulations) less difficult or demanding (ease them) for those specific amounts. |
| Q10 | red tape | Alternately, a non-government humanitarian organisation, which would have the expertise to navigate the elaborate red tape, could set up a non-profit remittance platform for migrants to send money home for little or no cost | Excerpt/Passage Explanation: The passage suggests that a humanitarian group could use its knowledge to deal with complex official rules (red tape) so that migrants can send money back to their families without paying a lot of money. Answer Explanation: The answer refers to official rules and processes that are complicated and take a long time to finish. Reason For Correctness: The correct answer is correct because paragraph F suggests that a non-government organization could use its skills to manage the complex rules, or 'red tape', that currently make it difficult and expensive for migrants to send money home. This organization would create a nonprofit system to help migrants avoid high fees. In this context, 'elaborate' serves as a synonym for 'complicated', and 'navigate' is similar to 'handling'. |
| Q11 | bank deposits / the bank / a bank | More often than not, that money is in the form of bank deposits earning a tiny percentage of interest, none at all or even a negative rate of interest | Excerpt/Passage Explanation: The passage explains that most of the time, the money migrants save is kept as bank deposits, which earn very little or no extra money (interest). Answer Explanation: The answer refers to money kept in a bank account, also known as 'bank deposits'. Reason For Correctness: The correct answer is bank deposits because paragraph G explains that migrants who work in other countries often save money. However, this saved money is usually kept in the form of bank deposits. These specific accounts pay a very small ('tiny') amount of interest, or sometimes no interest at all. Therefore, the savings do not grow much while sitting in the bank. |
| Q12 | infrastructure | invested money would be used to build infrastructure in that country | Excerpt/Passage Explanation: The passage explains that when people put their money into certain investments, that money is used to construct important buildings and systems in their home country. Answer Explanation: The answer is the basic systems and structures, such as roads and power supplies, that a country needs to function properly. Reason For Correctness: The correct answer is 'infrastructure' because Paragraph H describes a plan where migrants purchase bonds to help their home countries. The text explains that the money from these investments would be used to 'build infrastructure.' In the summary, 'homeland' acts as a synonym for 'country of origin,' and the passage links the construction of this 'infrastructure' directly to the 'development' of that country. |
| Q13 | affluent migrants | Advancing the idea one step further, why not make this transmission hub the conduit for affluent migrants to donate to worthy causes in their homeland so they may share their prosperity with their compatriots on a larger scale | Excerpt/Passage Explanation: The passage suggests that the place used for sending money could also be a way for rich migrants to give money to helpful projects in the country they came from. Answer Explanation: The answer refers to people who live in a new country and have a lot of money. Reason For Correctness: The correct answer is located in the final section of the text. The summary describes a group of people who might give donations to support good projects in their home country. The passage mentions that a money center could act as a way for 'affluent migrants' to 'donate to worthy causes'. In this context, 'affluent' means rich or wealthy, and 'worthy causes' refers to charitable projects. |