The United Patriots, which includes the anti-Semitic Ataka ("Attack") party, stoked anti-immigration sentiment to come third in the elections while also railing against Muslims, Roma and gay people.
The tie-up of the fractious alliance with Borisov's pro- EU centre-right GERB party, which came first in the elections, will give the coalition a majority of just two seats.
"If we have not agreed on a government platform with these people, we would have had to go for new elections in several months and end up in the same situation," Borisov said in a special address in parliament, flanked by the leaders of the United Patriots.
With Bulgaria and Russia enjoying close historical, cultural and economic ties, the patriots campaigned on a platform of getting EU sanctions on Moscow lifted.
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However in its joint programme the coalition commits Bulgaria to continued membership of the European Union and the NATO military alliance, and to curbing immigration.
The parties also pledged to boost the minimum salary in the EU's poorest country from the current 460 leva (230 euros) to 650 leva within four years and to hike state pensions.
Borisov, 57, has already served twice as premier, from 2009 to 2013 and again from 2014 to 2017.
He quit early both times, first in 2013 after mass protests and then last November after his candidate lost the presidential race to air force commander Rumen Radev, backed by the opposition Socialists (BSP).
The government will rely on loose backing from the new Volya party of businessman Veselin Mareshki, who likes to be called the Bulgarian Donald Trump, and which won 12 seats in the 240-seat parliament.
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